L Brands bonds sink as ratings downgraded; Uniti notes rebound after earnings report

By James McCandless

San Antonio, March 13 – The week in the distressed debt market closed with positivity that was centered on newsmakers and the energy space.

L Brands, Inc.’s notes trended lower as the company received a slate of ratings downgrades during the Friday session.

Sector peer Party City Holdco Inc.’s issues saw a partial recovery a day after a negative fourth-quarter earnings report sent tranches tumbling.

Meanwhile, REIT Uniti Group Inc.’s paper rebounded off of Thursday’s drop as the market reacts to lukewarm earnings.

As oil futures gained at the end of the week, Whiting Petroleum Corp.’s, EQT Corp.’s and Chesapeake Energy Corp.’s notes were lifted along with them.

Telecom company Frontier Communications Corp.’s issues gained as the company moves toward bankruptcy.

Satellite name Intelsat SA’s paper improved.

Drug producer Mallinckrodt plc’s notes varied in direction after the company received a crucial supporter of its recent settlement.

L Brands declines

L Brands’ notes trended lower at the end of the week, traders said.

The 6¾% senior notes due 2036 dropped 6½ points to close at 86¼ bid. The 5¼% senior notes due 2028 lost 3¼ points to close at 85¾ bid.

During the Friday session, Moody’s Investors Service issued a slate of downgrades for the Columbus, Ohio-based retailer.

The agency lowered all of the company’s ratings, including its corporate family rating, probability of default rating and issue-level ratings.

Moody’s cited the company’s recent sell-off of a majority of its Victoria’s Secret brand as an opportunity to focus on its more profitable Bath & Body Works unit but at the same time prevents diversification problems.

“It’s a problem, but then again how do you diversify right now?” a trader said.

Also, after the close on Thursday, the company announced that board member Sarah Nash would be named chair of the board of directors upon the close of the Victoria’s Secret sale.

Party City up

Sector peer Party City’s issues saw a partial recovery, market sources said.

The 6 5/8% senior notes due 2026 gained 2¾ points to close at 33¾ bid.

The Elmsford, N.Y.-based party supplies name improved after Thursday’s drop stemming from its Thursday release of fourth-quarter results.

In its report, the company highlighted a profit of 51 cents per share, lower than the 88 cents per share that analysts had expected.

Revenues were below predictions at $731.6 million.

The company also announced that executive Brad Weston would assume the position of chief executive officer, replacing Jim Harrison.

Uniti better

Meanwhile, property name Uniti’s paper rebounded, traders said.

The 7 7/8% senior notes due 2025 gained 2 points to close at 99½ bid. The 8¼% senior notes due 2023 shot up 6½ points to close at 85½ bid.

After the close on Thursday, the Little Rock, Ark.-based real estate investment trust issued a lukewarm fourth-quarter earnings report.

Outperforming expectations of a 38 cents per share profit, the company showed a 48 cents per share profit.

On the other side of the spectrum, revenues came up short of predictions at $268.5 million.

Uniti’s structure has trended downward since the company reached a settlement with major customer Windstream last week.

Oil improves

As oil futures gained at the end of the week, distressed energy names were also positive, market sources said.

West Texas Intermediate crude oil futures for April delivery added 23 cents to cap the week at $31.73 per barrel.

North Sea Brent crude oil futures for May delivery finished the day at $33.85 per barrel after a 63 cent rise.

“Once Russia and Saudi Arabia stop fighting over supply, that should take some of the pressure off of crude prices,” a trader said.

Denver-based independent oil and gas producer Whiting Petroleum’s notes were lifted.

The 6¼% senior notes due 2023 picked up 8½ points to close at 19½ bid. The 6 5/8% senior notes due 2026 picked up 2 points to close at 15½ bid.

Pittsburgh-based producer EQT’s issues followed the trend.

The 7% senior notes due 2030 garnered 3¼ points to close at 68½ bid.

Oklahoma City-based peer Chesapeake Energy’s paper tracked upward.

The 11½% paper due 2025 gained 4¾ points to close at 22¾ bid. The 8% senior notes due 2025 moved up 2¾ points to close at 13 bid.

Frontier, Intelsat gain

Telecom company Frontier’s notes finished with a gain, traders said.

The 10½% senior notes due 2022 rose 2½ points to close at 37 bid. The 11% senior notes due 2025 jumped up 8¼ points to close at 38 bid.

The Norwalk, Conn.-based wireline communications company’s tranches saw a volatile week after news broke on Tuesday that it was preparing to skip a March 15 coupon payment in the run-up to a Chapter 11 bankruptcy filing.

Talks with creditors are ongoing to determine a restructuring plan that would cut its debt load.

Luxembourg-based satellite operator Intelsat’s issues improved.

Intelsat (Luxembourg) SA’s 8 1/8% senior notes due 2023 gained 9½ points to close at 36½ bid. The 9½% senior notes due 2023 tacked on ½ point to close at 48 bid.

Mallinckrodt varies

Elsewhere, drug producer Mallinckrodt’s paper was flat to higher, market sources said.

The 5¾% senior notes due 2022 added 1½ points to close at 74 bid. The 5 5/8% senior notes due 2023 held level at 46¾ bid.

On Wednesday, the Staines-upon-Thames, England-based pharmaceutical company received the key support of the New York State Attorney General for its proposed global opioid settlement.

The development brings the total number of supportive states and territories to 48.

Last month, the company reached a $1.6 billion global settlement proposal that included the Chapter 11 bankruptcy filing for its U.S. segment.

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