PetSmart notes in focus on subsidiary earnings; American Airlines paper trades mixed

By James McCandless

San Antonio, Dec. 9 – As the week in the distressed debt space reached the midpoint, the retail and travel industries were in the forefront of activity.

PetSmart, Inc.’s notes varied in direction after subsidiary Chewy, Inc. reported largely positive results for the third quarter.

Sector peer Nordstrom, Inc.’s issues gained.

Elsewhere, in travel, American Airlines Group, Inc.’s paper diverged after an asset manager disclosed a reduced ownership stake.

Air carrier United Airlines Holdings, Inc.’s notes were also mixed.

In the communications space, GTT Communications, Inc.’s issues were under water after making a change to its executive team.

Wireline name Frontier Communications Corp.’s paper rose.

In the oil and gas sector, Antero Resources Corp.’s and Superior Energy Services, Inc. drifted in different directions and SM Energy Co.’s paper improved.

PetSmart trades mixed

PetSmart’s notes varied in direction through the middle of the week, traders said.

The 8 7/8% senior notes due 2025 rose 1 point to close at 102¼ bid. The 5 7/8% senior notes due 2025 gave back ¼ point to close at 102½ bid.

After the close on Tuesday, the Phoenix-based pet supplies retailer’s e-commerce subsidiary, Chewy.com, reported results for the third quarter.

Chewy reported a loss of 8 cents per share, somewhat better than the 15 cents per share loss that analysts had estimated.

Revenues outpaced expectations at $1.78 billion.

The company reported a 45% increase in sales, the third consecutive month of that level of growth.

In a CNBC interview, chief executive officer Sumit Singh said that while the pandemic accelerated the company’s sales, shifting tides in the pet retail space drove the overall success of the name.

“Those bonds traded within the daily range,” a trader said. “Since the news was mostly positive, I think there might be a point or two upside by the end of the week.”

Seattle-based department store chain Nordstrom’s issues gained.

The 5% senior notes due 2044 tacked on 2½ points to close at 96½ bid.

Airlines active

Elsewhere, in travel, American Airlines’ paper diverged, market sources said.

The 5% senior notes due 2022 shaved off ½ point to close at 87½ bid. The 11¾% senior paper due 2025 held level to close at 116¼ bid.

The Fort Worth-based commercial airline’s structure remained in focus after a large asset manager disclosed a reduced stake in the company.

In a Securities and Exchange Commission filing on Tuesday, BlackRock disclosed a 4.8% stake in the name.

Prior to this filing, the firm had a 5.5% stake in American Airlines as of April 2020.

Also, more headlines about a vaccine for the coronavirus abound as Canada became the second country to approve of its use.

On Thursday, the U.S. Food and Drug Administration will meet to discuss granting emergency approval.

Chicago-based carrier United Airlines’ notes were also mixed.

The 5% senior notes due 2024 closed level at 100 bid. The 4¼% senior notes due 2022 chalked off ½ point to close at 100½ bid.

GTT notes weaken

In the communications space, GTT’s issues were under water, traders said.

The 7 7/8% senior notes due 2024 dropped 4¼ points to close at 35¼ bid.

Late in the day on Tuesday, the McLean, Va.-based cloud networking services provider announced the resignation of Steven Berns as chief executive officer.

The company appointed senior vice president of finance Donna Granato to the role on an interim basis.

In October, GTT reached an agreement to sell its infrastructure division.

GTT agreed to sell off the segment to I Squared Capital for $2.15 billion.

The deal is expected to close in the first half of 2021.

Norwalk, Conn.-based wireline communicator Frontier Communications’ paper rose.

The 10½% senior notes due 2022 garnered ¾ point to close at 49½ bid. The 11% senior notes due 2025 moved up 1½ points to close at 48¾ bid.

Oil names differ

In the oil and gas space, West Texas Intermediate crude oil futures for January delivery shed 8 cents to finish the day at $45.52 per barrel.

North Sea Brent crude oil futures for February delivery landed at $48.86 per barrel after a 2 cent pickup.

Denver-based independent oil and gas producer Antero Resources’ notes drifted in different directions.

The 5 1/8% senior notes due 2022 pushed up ¾ point to close at 97 bid. The 5 5/8% senior notes due 2023 were docked ¼ point to close at 94 bid.

Houston-based oilfield services company Superior Energy’s issues moved the same way.

The 7 1/8% senior notes due 2021 reached up 3 points to close at 31 bid. The 7¾% senior notes due 2024 trailed by 1½ points to close at 31 bid.

SM Energy, another Denver-based E&P company, saw its paper improve.

The 5 5/8% senior notes due 2025 gained 1 point to close at 75 bid. The 6 5/8% senior notes due 2027 rose ¾ point to close at 75 bid.

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