CBL notes gain on back of Sears bankruptcy; Intelsat in focus with Q3 results on horizon

By James McCandless

San Antonio, Oct. 19 – The distressed space was relatively quiet to finish a busy week on Friday as the market enters the third-quarter earnings season.

CBL & Associates Properties, Inc.’s notes were gaining as the company garnered attention for its Sears properties.

Retail names PetSmart, Inc. and Neiman Marcus Group, Inc. saw small boosts.

In telecom, attention turned to Intelsat SA as third-quarter results are expected in less than two weeks, leading to mixed results in its issues. Sector peer Frontier Communications Corp.’s paper declined.

Elsewhere, Diebold Nixdorf, Inc.’s notes fell further as the market anticipates its next earnings report.

Chemical name Hexion, Inc.’s notes continued to rise, capping a week of heavy trading as holders prepare for debt talks.

The energy space closed the week with Sanchez Energy Corp. paper improving and EP Energy Corp. tranches seeing a sharp decline.

CBL rises

CBL notes were seen rising at the end of the week, traders said.

The 5.95% notes due 2026 added about ¼ point to close at 83¾ bid.

On Thursday, the 5.95% notes rose about 2 points.

Several of the Chattanooga, Tenn.-based real estate investment trust’s properties are leased to Sears, according to a market source.

“Everyone’s looking for an angle in retail,” a trader said. “This is the latest topical name surrounding the sector.”

The company announced Thursday that it had completed the sale of a community center in Georgia to United Properties Corp. for $16.5 million.

“Depending on the type of property, I’d say they’re more inclined to sell than rent out to another retailer,” a trader said.

Elsewhere in retail, Phoenix-based pet supplies retailer PetSmart saw its 5 7/8% notes due 2025 pick up ¼ point to close at 80¼ bid.

Dallas-based luxury retailer Neiman Marcus’ 8% paper due 2021 gained about ½ point to close at around 64½ bid.

Intelsat mixed

Intelsat’s notes were mixed, market sources said.

The Intelsat (Luxembourg) SA 8 1/8% notes due 2023 picked up about ½ point to close at around 91 bid. The 7¾% notes due 2021, while pushing as high as 96 in intraday trading, ended back level at 95¾ bid, according to Trace data.

The market started to turn its attention to the Luxembourg-based satellite name after the company announced that it would be reporting its third-quarter results on Oct. 30, market sources said.

“We know it’s going to be a loss,” a trader said.

The company came into focus after announcing two new business segments earlier this week, focusing on satellite coverage on high-traffic business jet routes and expanding cellular coverage in sub-Saharan Africa.

Meanwhile, Norwalk, Conn.-based wireline telecom company Frontier’s notes declined on Friday.

The 7 5/8% notes due 2024 lost about 1¼ points to close at around 60¾ bid. The 10½% notes due 2022 fell about ¾ point to close at 86½ bid. The 11% notes due 2025 dropped about 1 point to close at 75½ bid.

Diebold lower

Another company with earnings out at the end of the month was North Canton, Ohio-based connected commerce solutions company Diebold, which saw its paper declining Friday, traders said.

The 8½% paper due 2024 lost about ½ point to close at 65 bid.

The company will report its third-quarter results on Oct. 31.

Analysts are expecting an 11 cent per share loss, according to a market source.

“That’s the prevailing opinion, but it might not line up that way,” the source said.

The notes have been under negative pressure since the beginning of August after a surprise loss triggered a run of losses, with the 8½% paper falling from 92 bid to 54½ bid over the span of 10 days, according to Trace data.

Hexion adds to gains

Hexion’s notes continued to gain, market sources said.

The 6 5/8% notes due 2020 added about 1¼ points to close at around 92 bid. The 9% notes due 2020 also picked up about 1¼ points to close at around 72½ bid.

On Thursday, the 6 5/8% notes rose 1¾ points and the 9% notes gained 1¾ points.

Notes were active and declining in the first half of the week after reports surfaced about the Columbus, Ohio-based chemical producer’s troubles, highlighting supply woes as a result of the current trade climate and $2.4 billion of the company’s debt coming due in 2020.

News broke Wednesday that holders of the company’s 9% second-lien notes have hired law firm Milbank, Tweed, Hadley & McCloy to represent them in upcoming debt negotiations.

Oil names mixed

Oil saw an end-of-week improvement after a run of losses, with mixed results in bellwether oil tranches, traders said.

Houston-based independent oil and gas producer Sanchez Energy’s 6 1/8% notes due 2023 rose ½ point to close at 53½ bid.

Meanwhile, Houston-based peer EP Energy saw multi-point drops in its paper.

The 7¾% paper due 2022 plummeted about 7¾ bid to close at 74 bid. The 6 3/8% paper due 2023 lost about 3¼ points to close at around 65½ bid.

West Texas Intermediate crude oil futures picked up 47 cents to $69.13 per barrel after trading in the low 70s at the start of the week, according to a market source.

North Sea Brent crude oil futures rose 43 cents to $79.66 per barrel.

© 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.