Distressed bonds weaker, but beat broader markets; iHeart firms on asset sale; Neiman off

By Stephanie N. Rotondo

Seattle, Jan. 7 – The distressed debt market weakened further in Thursday trading, though it held in better than some, according to traders.

“The whole market kind of got whacked today,” a trader said, as equities dropped 2% to 3% and domestic oil prices fell 2.36% to $33.17 a barrel.

“Despite how bad the market was, it seems like some things held up OK,” another trader said. “I think a lot of guys were hiding given what equities were doing, but I also feel like our market held up much better than expected.”

Even the troubled energy space managed to contain its losses for the day.

Chesapeake Energy Corp.’s new 8% second-lien notes due 2022, for instance, traded unchanged to off just a point, traders reported.

“They were down initially, but it seemed like they came back,” trading with a 51 handle, a trader said. At that level, the bonds would be about unchanged on the day.

A second trader, however, deemed the issue off a point at 50 7/8.

“They were very actively traded,” the trader commented.

Oasis Petroleum Inc. ended weaker as well, though more so than Chesapeake. The 6 7/8% notes due 2022 lost nearly 3½ points to close at 62¾, a trader said.

Among offshore oil producers, a trader said there has been a “big seller” of Atwood Oceanics Inc. paper in the last couple of days. He said the 6½% notes due 2020 traded down “another 3 points” to 49.

Another trader placed the issue in a 49¾ to 50 context, which he deemed “down a couple points.”

Pacific Drilling SA’s 5 3/8% notes due 2020 were meantime 2¼ points weaker at 39¼.

Bucking the day’s trend, iHeartMedia Inc. bonds continued to improve after Clear Channel Outdoor said it had sold $458.5 million in billboard assets to Lamar Advertising Co.

The bonds had rallied late Wednesday on reports the two parties were discussing transferring the assets.

iHeart sells assets

iHeartMedia debt remained firm despite the softer tone of the broader markets, as investors reacted positively to news of an asset sale.

A trader saw the 14% notes due 2021 rising over a point to 30, while the 10% notes due 2018 improved 1½ points to 41½.

Another trader echoed those levels.

“The lowest dollar-priced [issues] definitely rallied a bit,” the second trader said. “There wasn’t a ton of follow-through in the other ones.”

Clear Channel Outdoor, the outdoor advertising unit of San Antonio-based iHeart, said it wrapped two transactions with Lamar, selling off its assets in Reno, Seattle and Des Moines in one piece and its Cleveland and Memphis assets in another.

Based on Wednesday’s reports, proceeds from the sales are expected to be used to pay down debt. However, in its announcement the company said it was “considering the optimal uses of the proceeds of the sales.”

Neiman downgraded, falls

In the world of retail, Standard & Poor’s downgraded the Neiman Marcus Group Inc. on Thursday.

The overall credit rating was dropped to B- from B. The 8% notes due 2021 were then cut to CCC from CCC+.

On the news, a trader said the paper traded down “a couple points” to 74 bid, 74½ offered.

Also in that space, the Gymboree Corp.’s 9 1/8% notes due 2018 were seen rising 4 points to 26½.

There was no fresh news out to act as a catalyst.

Navios busy

A trader said Navios Maritime Partners LP’s 8% notes due 2021 were “widely quoted” in Thursday trading, slipping over a point to 75.

The trader added that there was “heavy volume” in the issue.

Also on Thursday, Stifel Nicolaus & Co. downgraded the company’s equity to “Sell” from “Hold,” citing expectations that a restructuring and dilution were looming due to the company’s high leverage and cash burn.

Navios is a Monaco-based drybulk shipping company.

© 2015 Prospect News.
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