Energy names continue rise on oil price surge; Rite Aid off on results; PetSmart pops

By Paul Deckelman

New York, Jan. 3 – Activity in distressed debt and in the notes and bonds of otherwise underperforming companies was seen by traders to have picked up on Wednesday from Tuesday’s relatively sedate first session back after the long New Year’s holiday break, in line with a generally busier pace in the overall high-yield bond market.

For a second consecutive session, oil and natural gas credits were the main upside driver, as traders saw sharp gains in the likes of oil and gas exploration and production operators California Resources Corp., Denbury Resources Inc., EP Energy Corp., MEG Energy Corp. and driller Noble Holding International Ltd.

Those energy names, in turn, were fueled on their upward climb by a sharp spike in crude oil futures prices, which hit their highest levels since early 2015 on Wednesday, pushed upward by a combination of supply concerns in the wake of continued anti-government protests in key global oil producer Iran, as well as a falloff in U.S. crude oil inventories.

Natural gas provider Chesapeake Energy Corp.’s bonds also firmed solidly for a second straight day on expectations of increased natural gas demand throughout much of the United States, as a monster “bomb cyclone” winter storm approached the Northeast and frigid temperatures prevailed throughout much of the country.

Away from the energy sphere, traders saw Rite Aid Corp.’s notes slide after the drugstore chain operator reported quarterly results that included a drop on comparable-store sales and lower-than-expected revenues.

But fellow retailer PetSmart, Inc.’s bonds were solidly better.

And embattled telecom provider Frontier Communications Corp.’s paper was also firmer.

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