CBL notes fall as interest payment skipped; Valaris paper eyed in energy space

By James McCandless

San Antonio, June 2 – Distressed debt trading focused on the retail and energy sectors on Tuesday

CBL & Associates Properties, Inc.’s notes fell after the company said that it would skip an interest payment.

Sector peer Washington Prime Group Inc.’s issues also declined.

In the oil and gas space, Valaris plc’s paper saw varied movements after also announcing that it would miss payment on a coupon.

As oil futures pushed higher, Whiting Petroleum Corp.’s and SM Energy Co.’s notes followed while Occidental Petroleum Corp.’s issues diverged.

Meanwhile, in retail, Neiman Marcus Group, Inc.’s paper declined as a major creditor withdraws an examiner request in its bankruptcy case.

Party supplies name Party City Holdco Inc.’s notes were active but unchanged.

Elsewhere, utilities provider PG&E Corp.’s issues were seen improving.

CBL trades lower

CBL’s notes fell during the Tuesday session, traders said.

The 5¼% senior notes due 2023 declined by 4¼ points to close at 21 bid. The 4.6% senior notes due 2024 fell 3½ bid.

During Tuesday’s activity, the Chattanooga, Tenn.-based real estate investment trust announced that it would be skipping an $11.8 million interest payment on the 2023 notes.

The company has entered into a 30-day forbearance period.

“I think they will restructure at the end of those 30 days,” a trader said. “It doesn’t look like they have a lot of revenue coming in.”

Last week, the company said that it had drawn $280 million from its credit facility and furloughed employees.

Chief executive officer Stephen Lebovits said that the company only collected about 27% of its rent for April and anticipates collecting about 25% to 30% of May rent.

Columbus, Ohio-based sector peer Washington Prime’s issues also declined.

The 6.45% senior notes due 2024 lost ½ point to close at 58½ bid.

Valaris active

In the oil and gas space, Valaris’ paper saw varied movements, market sources said.

The 5.2% senior notes due 2025 tacked on ¼ point to close at 8¾ bid. The 7¾% senior notes due 2026 shed 1 point to close at 7½ bid.

On Monday, the London-based contract driller was another name to say that it would forego interest payments, totaling about $26 million.

The payments, given a 30-day forbearance, concern the company’s 4 7/8% notes maturing in 2022 and 5.4% notes due 2042.

In April, news broke that Valaris had begun talks with creditors on coming up with a restructuring plan and filing for Chapter 11 bankruptcy.

“They will have to present something that puts the bondholders in charge,” a trader said.

Oil futures higher

As oil futures pushed higher, distressed energy names mostly followed the trend, traders said.

West Texas Intermediate crude oil futures for July delivery spiked $1.37 to cap the day at $36.81 per barrel.

North Sea Brent crude oil futures for August delivery settled at $39.57 per barrel after a $1.25 gain.

Denver-based independent oil and gas producer Whiting Petroleum’s notes followed suit.

The 6¼% senior notes due 2023 grabbed 1¼ points to close at 13¼ bid. The 6 5/8% senior notes due 2026 improved by 1½ points to close at 12 bid.

Houston-based producer SM Energy’s issues joined the positive trend.

The 5 5/8% senior notes due 2025 rose ¼ point to close at 52¾ bid. The 6 5/8% senior notes due 2027 inched up ¼ point to close at 50½ bid.

Houston-based peer Occidental Petroleum’s paper diverged in direction.

The 2.9% senior paper due 2024 closed level at 80½ bid. The 2.7% senior paper due 2022 shot up 1 point to close at 92½ bid.

Neiman notes lower

Meanwhile, in retail, Neiman Marcus’ notes were in decline, market sources said.

The 8% senior secured notes due 2024 chalked off ½ point to close at 2½ bid. The 8¾% senior secured notes due 2024 shaved off ½ point to close at 2½ bid.

After the Monday close, the Dallas-based luxury retailer’s creditors, Marble Ridge Capital LP and Marble Ridge Master Fund LP, withdrew their motion for an appointment of an examiner for the company’s Chapter 11 case, Prospect News reported.

Marble Ridge had initially pushed for an examiner to investigate the company’s 2018 transaction that moved its MyTheresa segment into private equity hands.

Last week, administrative agent Deutsche Bank said that it was concerned that the company might not be able to pay back its debtor-in-possession loan.

Neiman Marcus filed for Chapter 11 bankruptcy in early May.

Elmsford, N.Y.-based party supplies retailer Party City’s issues were active but ultimately flat by the afternoon’s end.

The 6 5/8% senior notes due 2026 closed level at 16 bid.

PG&E up

Elsewhere, utilities provider PG&E’s paper was seen improving, traders said.

The 6.05% notes due 2034 garnered 2 points to close at 16¾ bid.

The San Francisco-based bankrupt electric utility’s paper has been active this week after news broke on Friday that California regulators had voted to approve its restructuring plan.

Measures to improve the company’s governance process, operational structure and safety procedures were adopted as part of the approval.

Less than a month away from its expected bankruptcy exit, PG&E also gained the right to issue new debt.

© 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.