PetSmart higher as earnings anticipated; Hexion mixed as company launches DIP term loan

By James McCandless

San Antonio, April 8 – A new week in distressed trading continued to focus on news-driven names.

PetSmart, Inc.’s notes moved higher as the market anticipated the release of earnings numbers from the private name.

Sector peer Bed Bath & Beyond, Inc.’s issues closed better.

Elsewhere, chemicals name Hexion Inc.’s paper was mixed as the company launched a $350 debtor-in-possession term loan.

Meanwhile, in oil and gas, Alta Mesa Resources, Inc.’s notes dropped before a company announcement about financial alternatives.

Rising oil futures gave way for similar improvements for California Resources Corp., Weatherford International plc and Denbury Resources Inc.’s issues.

In telecom, Intelsat SA and Frontier Communications Corp.’s paper was seen gaining.

Retail names higher

In the retail space, PetSmart’s notes were higher on Monday, traders said.

The 8 7/8% notes due 2025 added 2¾ points to close at 80¼ bid. The 5 7/8% notes due 2025 rose 1½ points to close at 88½ bid.

The Phoenix-based pet supplies retailer’s notes continued to move as the market anticipates an earnings call that the company is expected to hold on Tuesday.

“I don’t expect it to be positive, at least not totally so,” a trader said. “But the bonds have been set up for either outcome.”

On Friday, the name saw negative headlines as a major creditor filed to assume the plaintiff position in a lawsuit.

The company is accused of being in default when it transferred a large portion of its e-commerce segment Chewy.com into private equity.

The creditor, Capital Research, owns $600 million of the company’s bonds.

Union, N.J.-based sector peer Bed Bath & Beyond’s issues were similarly better.

The 5.165% notes due 2044 gained 2¼ points to close at 77 bid. The 4.915% notes due 2034 picked up 2¾ points to close at 80 bid.

Hexion mixed

Elsewhere, Hexion’s paper ended the session mixed, market sources said.

The 6 5/8% paper due 2020 lost ½ point to close at 81¼ bid. The 9% paper due 2020 rose 2 points to close at 20½ bid.

On Monday, the Columbus, Ohio-based chemicals producer launched its $350 million 18-month debtor-in-possession term loan with price talk of Libor plus 275 basis points to 300 bps with a 0% Libor floor and an original issue discount of 99.5, Prospect News reported.

Last week, the company filed for Chapter 11 bankruptcy.

Alta Mesa drops

Meanwhile, in the oil and gas sector, Alta Mesa’s notes saw a drop, traders said.

The 7 7/8% notes due 2024 fell 4 points to close at 32 bid.

After the close on Monday, the Houston-based independent oil and gas producer announced that it has drawn all of the remaining capacity of its senior secured revolving credit facility.

The company plans to use the $86 million for general corporate purposes.

The company has retained a financial advisor as it considers financial alternatives.

Concurrently, it also announced that it had received a delisting warning from the Nasdaq stock exchange.

“Odds are, they’ll have to restructure,” a trader said.

Oil names up

Distressed energy names saw its tranches move positively as oil futures saw a boost, market sources said.

Los Angeles-based producer California Resources’ issues were on the rise.

The 6% notes due 2024 pushed 1½ points higher to close at 72½ bid. The 8% notes due 2022 picked up ½ point to close at 82½ bid.

Baar, Switzerland-based oilfield services provider Weatherford’s paper was also trending upward.

The 8¼% paper due 2023 jumped up 3½ points to close at 70½ bid. The 9 7/8% paper due 2024 added 1 point to close at 70¼ bid.

Houston-based sector peer Denbury’s notes were also positive.

The 6 3/8% notes due 2021 improved by 3¾ points to close at 85 bid. The 7½% notes due 2024 tacked on 1½ points to close at 88½ bid.

West Texas Intermediate crude oil futures for May delivery pushed up $1.32 to close at $64.40 per barrel on Monday.

North Sea Brent crude oil futures for June delivery ended the session at $71.10 per barrel after rising 76 cents.

Intelsat, Frontier gains

In telecom, Luxembourg-based satellite operator Intelsat’s issues were moving up, traders said.

Intelsat Jackson Holdings SA’s 5½% notes due 2023 edged up ¼ point to close at 90¾ bid. Intelsat (Luxembourg) SA’s 8 1/8% notes due 2023 gained ¾ point to close at 77 bid.

Elsewhere in the sector, Frontier’s paper was also positive.

The 10½% paper due 2022 picked up ¼ point to close at 76¼ bid. The 11% paper due 2025 rose 2½ points to close at 68½ bid.

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