Gulfport Energy notes up despite ratings shift; Washington Prime gains in REIT space

By James McCandless

San Antonio, March 20 – The distressed debt market finished the week with continued turmoil as more attention was paid to energy and retail-focused names.

Gulfport Energy Corp.’s notes moved up despite a downward ratings shift as the oil and gas space sees a contraction.

With weakened oil futures as the backdrop, Occidental Petroleum Corp.’s and Whiting Petroleum Corp.’s issues varied in direction as Valaris plc’s paper gained.

Meanwhile, REIT Washington Prime Group Inc.’s notes gained despite receiving a pair of ratings cuts.

Sector peer CBL & Associates Properties, Inc.’s issues declined.

In the retail space, Party City Holdco Inc.’s paper diverged while L Brands, Inc.’s notes slid as both companies grapple with mass store closures.

Telecom name Frontier Communications Corp.’s issues saw positivity.

Gulfport up

Gulfport Energy’s notes were spotted moving up on Friday, traders said.

The 6% senior notes due 2024 picked up 2 points to close at 22 bid.

The rise in the Oklahoma City-based independent oil and gas producer’s structure came despite S&P Global Ratings’ early Friday move to shift one of its ratings downward.

The agency lowered the company’s unsecured notes rating to CCC+ from B.

The move reflects its view of the name’s weaker-than-anticipated financial measures in the wake of a fall in natural gas prices, which hit $1.774 per mmBTU’s on Friday.

On Wednesday, news reports indicated that the company had hired Perella Weinberg Partners LP and Tudor, Pickering, Holt & Co. as restructuring advisers in its attempt to handle its $2 billion debt pile.

Oil weakens

With weakened oil futures serving as the backdrop, distressed energy saw non-cohesive movements, market sources said.

West Texas Intermediate crude oil futures for April delivery fell $2.79 to cap the week at $22.43 per barrel.

North Sea Brent crude oil futures for May delivery finished the session at $26.98 per barrel after a $1.49 dip.

Houston-based producer Occidental Petroleum, which received a junk status label on Thursday, saw its issues vary in direction.

The 6.2% senior notes due 2040 held level at 61½ bid. The 5.55% senior notes due 2026 were pushed down 1¾ points to close at 61½ bid.

Denver-based peer Whiting Petroleum’s paper was similarly divergent.

The 6¼% senior paper due 2023 rose 3¼ points to close at 12¼ bid. The 6 5/8% senior paper due 2026 was docked 2 points to close at 8½ bid.

London-based contract driller Valaris’ notes ended the day with gains.

The 5.2% senior notes due 2025 improved by 1½ points to close at 15 bid. The 7¾% senior notes due 2026 added 1½ points to close at 14 bid.

“I think we’re looking at an up and down market for the next week at least,” a trader said.

WP gains, CBL declines

Meanwhile, property name Washington Prime’s issues gained ground, traders said.

The 6.45% senior notes due 2024 tacked on ¾ point to close at 61½ bid.

The gains come despite the Columbus, Ohio-based retail-focused real estate investment trust’s ratings being cut by Moody’s Investors Service and S&P.

Moody’s cut its ratings across the board, including operating subsidiary Washington Prime Group, LP's senior unsecured debt rating.

Most ratings are on review for downgrade.

The agency said that the company’s high leverage and weak liquidity position would only be exacerbated by the challenges presented by the coronavirus outbreak and the shuttering of retail locations en masse, posing potential covenant breach issues.

Later in the day, S&P lowered the company’s ratings to CCC+ from BB- and lowered the ratings on the unsecured debt to B- from BB and the preferred stock rating to CC from B- for similar reasons.

Chattanooga, Tenn.-based sector peer CBL’s paper declined.

The 5¼% senior notes due 2023 shaved off ¾ point to close at 28 bid. The 4.6% senior notes due 2024 lost 5 points to close at 25 bid.

Party City flat to lower

In the retail space, Party City’s notes diverged by the end of the session, market sources said.

The 6 1/8% senior notes due 2023 cratered 15½ points to close at 22½ bid. The 6 5/8% senior notes due 2026 held level to close at 17½ bid.

This week, in response to the growing threat of the coronavirus, the Elmsford, N.Y.-based party supplies retailer announced that it would be temporarily closing all of its U.S. retail locations through March 31.

It also said that its corporate staff would work remotely through April 3.

In reaction to the news, S&P cut the company’s overall rating to CCC+ from B based on the argument that already weak operating conditions combined with the potential hit of a pandemic would complicate its refinancing efforts.

Columbus, Ohio-based retailer L Brands, another name that announced temporary mass store closures this week, saw its issues slide.

The 6¾% senior notes due 2036 dipped 1 point to close at 70¼ bid. The 5¼% senior notes due 2028 dived 9¾ points to close at 63¾ bid.

Frontier positive

Telecom name Frontier’s paper was positive as the week finished, traders said.

The 10½% senior paper due 2022 garnered 1¼ points to close at 28¼ bid. The 11% senior notes due 2025 picked up 2½ points to close at 28½ bid.

Early in the week, the Norwalk, Conn.-based wireline communications company announced that it would forgo about $322 million in interest payments that were due March 15.

The company is using its 60-day forbearance period to work out a restructuring plan with is creditors, with the expectation that it will file for Chapter 11 bankruptcy.

A day after the announcement, the company received a pair of downgrades from S&P and Fitch Ratings.

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