Energy higher following surge in oil prices; hospitals mixed following health care slowdown; Hertz puts on brakes

By Colin Hanner

Chicago, June 27 – Distressed energy names were generally higher with rising oil prices on Tuesday, market sources said, with Los Angeles-based California Resources Corp. leading the sector with volume and mirroring others with round number gains.

Estimates prior to the Energy Information Administrations’ figures, which will be released on Wednesday, show that crude will fall by more than 3 million barrels during last week’s period, prompting the surge in oil that has, of the past week, been plagued by falling prices.

Plano, Texas-based oil and natural gas company Denbury Resources Inc. followed with similar gains.

The health care bill intended to go before the Senate for a vote later this week, before the July 4 holiday, was put on hold by Senate leaders on Tuesday afternoon due to a lack of Republican support needed to pass the bill.

Though hospital groups’ equities climbed on the day, trades in the bond market were few and far between. Community Health Systems, Inc. was up in one of its issues, though its spinoff, Quorum Health Corp., was lower.

A few pharmaceutical names traded on Tuesday, though volume was lower than Monday.

And, a day following frenzied speculation over Hertz Global Holdings, Inc.’s potential relationship with Apple Inc. and its autonomous car fleet, the rental car company saw mixed movement in a few of its issues.

E&P up as oil breaks from lows

Energy names followed the breakaway surge of oil on Tuesday on optimism that crude inventories will fall for the previous week.

West Texas Intermediate crude oil, was up 83 cents, or 1.91%, to $44.21, and spent much of the day with gains over 2%.

New data from the U.S. Commodity Futures Trading Commission showed that bear bets over bull bets have fallen by nearly six times since February. WTI lows of $42, which were reached on Friday, are not far off lows to be expected soon, several media sources reported.

On the day, California Resources’ 8% notes due 2022 were up 2 points to a 62½ bid, 63½ offer, a market source said.

Denbury Resources’ 6 3/8% notes due 2021 were up 2 points to 58.

And Canadian oil sands producer MEG Energy Corp.’s 7% notes due 2024 went out at 77, slightly higher on the session.

Hospitals, pharma mixed

Stymied by the lack of support from the Republican side of the aisle, health care legislation that was supposed to go before the Senate for a vote before the holiday recess was pushed back on Tuesday afternoon.

Assuming all Democratic senators vote against the bill, only two Republican senators can vote against the bill. As of Tuesday morning, five senators had voiced dissent with the bill.

With that, hospital groups were mixed on the session.

Franklin, Tenn.-based hospital operator Community Health’s 6 7/8% notes due 2022 were up 1 point to 87½.

Quorum Health’s 11 5/8% notes due 2023 were down ½ point to 88½.

Edging just slightly lower following a hint that the Federal Trade Commission will likely approve of its merger with Walgreen Boots Alliance, Rite Aid Corp.’s 6 1/8% notes due 2023, were down 1/8 point to 96 7/8. Valeant Pharmaceuticals International Inc.’s 5 7/8% notes due 2023 were up ¼ point to 85¼, a market source said, while the 6 1/8% notes due 2025 were up 1/8 point to 84 3/8.

The 5½% notes due 202 were quoted at 81.

Speculation around a potential debt-equity swap, an effort to reduce the company’s billions of dollars’ worth of debt, came to light on Monday, when notes traded about in line with Tuesday’s movement.

Hertz continues activity

Bondholders’ reading into a potential Hertz-Apple partnership, fueled by Google parent Alphabet Inc. and rental car company Avis Budget Group Inc.’s earlier partnership announcement on Monday, was quieter on Tuesday, with notes generally trending higher on weak volume.

Its 7 5/8% notes due 2022 were up ¼ point to par on “small volume,” a market source said, while its 5 7/8% notes due 2020 were unchanged at 96.

Its 6¼% notes due 2022 were up 1¼ points to 86¼.

On Monday, media outlets reported that Apple had leased six Lexus sport-utility vehicles from Hertz to be used for its self-driving car program, fueling a furor of trading in Hertz’s equity and less so in its bonds.

Distressed wrap

Pet retailer PetSmart, Inc., an active name for over the past week, was unchanged in its 5 7/8% notes due 2025, which finished at 95 3/8.

A day following the announcement that it will increase the size of its tender offer for six sets of notes by more than $300 million, Frontier Communications Corp. saw one trade in its 6¼% notes due 2021, which were unchanged at 89½.

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