Morning Commentary: Chesapeake bonds firm on 2017 estimates; Rent-A-Center slips on earnings

By Paul A. Harris

Portland, Ore., Feb. 14 – High-yield bonds were unchanged but firm at midmorning on Tuesday, according to a trader in New York. High-yield ETFs were lower.

The iShares iBoxx $ High Yield Corporate Bd (HYG) was down 0.18%, or 16 cents, at $87.50 per share. The SPDR Barclays High Yield Bond ETF (JNK), at $36.88 per share, was down 0.16%, or 6 cents.

Bonds of Oklahoma City-based energy giant Chesapeake Energy Corp. were up a touch on upbeat capital expenditures guidance and production estimates, the trader said.

In a Tuesday report the company said its exit rate oil production is projected to grow by 10% in 2017.

Chesapeake said it plans to operate an average of approximately 17 drilling rigs this year, compared to 10 rigs in 2016.

In the company's report, Chesapeake chief executive officer Doug Lawler cited improved capital efficiencies and profitability from its significant portfolio of high rate of return drilling opportunities.

In the furniture and appliance rental sector Rent-A-Center, Inc. bonds were down 2 points on poor earnings.

The Plano, Texas-based company reported Tuesday that year-over-year consolidated total revenues decreased 13.8% to $684.1 million in the fourth quarter of 2016, and same-store sales decreased 9.6%.

Rent-A-Center's 6 5/8% senior notes due Nov. 15, 2020 were 82 bid, 84 offered on Tuesday morning, the trader said.

Those bonds were 84 bid, 85 offered on Monday.

Among recent issues, bonds priced earlier in the month by Post Holdings Inc. were holding in above their new issue prices on Tuesday.

The Post 5½% senior notes due March 1, 2025 (B3/B) were par ½ bid.

The 5¾% senior notes due March 1, 2027 (B3/B) were 101 bid.

The bonds came on Feb. 6 in tranches sized $1 billion and $750 million, respectively, at par.

Quiet primary

The primary market remained quiet on Tuesday morning, with just one deal in the market.

Gateway Casinos & Entertainment Ltd. has been on the road with a $225 million offering of seven-year second priority senior secured notes (Caa1/CCC+).

Price talk could surface later Tuesday on the deal, which has been whispered in the mid 8% area, the trader said.

Morgan Stanley & Co. LLC, SunTrust Robinson Humphrey Inc., BMO, Macquarie, CIBC and National Bank of Canada are running the deal for the Burnaby, B.C.-based gaming company's refinancing and acquisition-related deal.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.