J.C. Penney notes trade higher before bankruptcy filing; WeWork up on quarterly results

By James McCandless

San Antonio, May 15 – The distressed debt market saw more activity in the retail and telecom sectors on Friday.

J.C. Penney Co., Inc.’s notes finished the day better before filing for Chapter 11 bankruptcy following the market close.

Sector peer L Brands, Inc.’s issues saw mixed activity.

Real estate startup WeWork Cos. Inc.’s paper tracked higher on the back of recently released first-quarter results.

Meanwhile, oil futures showed more positivity, mirrored by Whiting Petroleum Corp.’s notes while Occidental Petroleum Corp.’s issues diverged and Antero Resources Corp.’s paper fell.

In the telecom space, Intelsat SA’s notes ended with mixed results a day after announcing a bankruptcy filing.

Wireline communications name Frontier Communications Corp.’s issues also differed in direction.

Pharmaceuticals name Endo International plc’s paper was little moved as an exchange offer starts.

J.C. Penney better

J.C. Penney’s notes finished Friday in a better position, traders said.

The 5.65% senior notes due 2020 shot up 9½ points to close at 13¼ bid. The 6 3/8% senior notes due 2036 rose 4¼ points to close at 7 bid.

After the Friday close, the Plano, Tex.-based department store chain announced that it filed for Chapter 11 bankruptcy, entering into a restructuring support agreement with lenders holding about 70% of its first-lien debt to reduce its outstanding debt and strengthen its financial position, Prospect News reported.

The notes had seen positivity by the end of trading on news that the company had made a $17 million interest payment on a senior secured term loan facility that was due May 7.

The retailer has received commitments for $900 million in DIP financing from first-lien lenders, including $450 million in new money.

Earlier this week, reports indicated that J.C. Penney was seeking $450 million in potential bankruptcy funding.

Columbus, Ohio-based peer L Brands’ issues saw mixed activity.

The 6¾% senior notes due 2036 were docked 5 points to close at 62 bid. The 5¼% senior notes due 2028 grabbed ¾ point to close at 67¼ bid.

WeWork higher

Real estate name WeWork’s paper tracked higher, market sources said.

The 7 7/8% senior notes due 2025 rose ½ point to close at 41 bid.

Toward the end of Thursday, the New York-based coworking startup announced that first-quarter revenue surpassed $1 billion for the first time but did not mention profitability.

Revenue for the quarter was $1.1 billion and cash burn improved 60% sequentially.

By the end of March, the company had $3.9 billion cash and underfunded cash commitments.

WeWork said in March that the company has enough cash on hand to weather the pandemic.

Recently, the company’s board of directors, a co-founder and large investor SoftBank became involved in a legal dispute after SoftBank withdrew from a $3 billion tender offer.

Futures positive

Meanwhile, in oil and gas, distressed tranches were non-cohesive as futures showed more positivity, traders said.

West Texas Intermediate crude oil futures for June delivery picked up $1.87 to cap the week at $29.43 per barrel.

North Sea Brent crude oil futures for July delivery settled at $32.50 per barrel after a $1.37 upward shift.

Denver-based independent oil and gas producer Whiting Petroleum’s notes mirrored positive futures.

The 6¼% senior notes due 2023 improved by 1½ points to close at 8 bid. The 6 5/8% senior notes due 2026 tacked on 1 point to close at 8 bid.

Houston-based producer Occidental Petroleum’s issues diverged.

The 2.9% senior notes due 2024 shed 1¼ points to close at 73¼ bid. The 2.7% senior notes due 2022 added ½ point to close at 86½ bid.

Denver-based peer Antero Resources’ paper fell by the end of the afternoon.

The 5 5/8% senior notes due 2023 slipped ½ point to close at 58½ bid. The 5% senior paper due 2025 declined by 4 points to close at 53 bid.

Intelsat, Frontier mixed

In the telecom space, Intelsat’s notes finished with mixed results, market sources said.

Intelsat Jackson Holdings SA’s 8% notes due 2024 held level at 101½ bid. The 9¾% senior notes due 2025 lost 1¾ points to close at 61 bid.

On Thursday, the Luxembourg-based satellite operator filed for Chapter 11 bankruptcy to complete a financial restructuring and shore up liquidity.

The company hopes to reduce its debt burden significantly in the process.

A priority for the process is to be able to participate in accelerated clearing of C-band spectrum as ordered by federal regulators, which requires $1 billion in spending.

Participation boosts its eligibility for a December spectrum auction, where it stands to gain about $4.87 billion in revenue.

Norwalk, Conn.-based wireline communicator Frontier’s issue also differed in direction.

The 10½% senior notes due 2022 closed level at 32¾ bid. The 11% senior notes due 2025 garnered 1¾ points to close at 32¼ bid.

Endo little moved

Pharmaceuticals name Endo’s paper ended slightly moved, traders said.

The 6% senior notes due 2025 gained ¼ point to close at 73¾ bid. The 6% senior paper due 2023 shaved off ¼ point to close at 77½ bid.

The Dublin-based drug maker’s subsidiaries Par Pharmaceutical, Inc., Endo DAC, Endo Finance LLC and Endo Finco Inc. started exchange offers on Thursday for three series of their senior notes.

The companies plan to exchange up to $400 million of 7½% new first-lien senior secured notes due 2027, up to $1,110,440,000 of new 9½% second-lien secured notes due 2027 and up to $2,707,766,000 of new 6% senior notes due 2028.

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