Bed Bath & Beyond lower on transaction news; Superior Energy eyed as exchange starts

By James McCandless

San Antonio, Jan. 6 – The distressed debt market opened a new week with the focus on newsmakers in retail and energy.

Bed Bath & Beyond Inc.’s notes ended lower after the company announced a $250 million sale-leaseback transaction for some of its real estate.

Sector peer Revlon, Inc.’s issues were similarly negative.

Elsewhere, in oil and gas, Superior Energy Services, Inc.’s paper diverged as it starts an exchange offer.

Rising oil futures served as the backdrop for gains in Whiting Petroleum Corp.’s, Oasis Petroleum Inc.’s and Transocean Ltd.’s notes.

In the telecom space, Intelsat SA’s issues varied as the market analyzes what profits could come from a C-band spectrum auction.

Wireline communicator Frontier Communications Corp.’s paper was under pressure.

Meanwhile, in utilities, PG&E Corp.’s notes dipped on high levels of activity.

Bed Bath, Revlon lower

Bed Bath & Beyond’s longer-term notes ended the session at lower levels, traders said.

The 5.165% senior notes due 2044 lost 1¼ points to close at 73¾ bid. The 4.915% senior notes due 2034 shaved off ¼ point to close at 79¼ bid.

On Monday morning, the Union, N.J.-based department store chain announced that it had completed a sale-leaseback transaction to an affiliate of private equity firm Oak Street Real Estate Capital.

The deal, worth $250 million, is for approximately 2.1 million square feet of commercial space that the company will continue to occupy under long-term leases.

“They’re melting like an ice cream cone,” a trader said. “They’re going to be systematically selling assets for much of this year.”

Part of the sale included the company’s headquarters.

As part of its revamp efforts under the thumb of activist investors, the company recently announced the departure of several senior executives.

New York-based makeup name Revlon’s issues were similarly negative.

The 5¾% senior notes due 2021 dipped 1¼ points to close at 85 bid. The 6¼% senior notes due 2024 shed 1 point to close at 48¼ bid.

Superior Energy diverges

Elsewhere, in the oil and gas space, Superior Energy’s paper was active, market sources said.

The 7 1/8% senior notes due 2021 picked up ¾ point to close at 86½ bid. The 7¾% senior paper due 2024 fell 1½ points to close at 67½ bid.

The Houston-based oilfield services company’s subsidiary, SESI, LLC, commenced an offer to exchange up to $500 million of its $800 million outstanding 2021 notes for up to $500 million of newly issued 7 1/8% senior notes due 2021 and cash, Prospect News reported.

The company is offering for each $1,000 principal amount of original notes tendered at or prior to 5 p.m. ET on Jan. 17, an exchange consideration of $950 principal amount of new notes, an early participation premium of $50 principal amount of new notes, subject to proration, and a cash consent payment of $2.50.

Oil names gain

In the backdrop of rising oil futures, distressed energy tranches were propelled higher, traders said.

Crude futures continued to track higher amid continued tension in the Middle East.

West Texas Intermediate crude oil futures for February delivery added 22 cents to settle the session at $63.27 per barrel.

North Sea Brent crude oil futures for March delivery finished at $68.91 per barrel following a 31 cent gain.

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

The 6¼% senior notes due 2023 garnered 3 points to close at 91¼ bid. The 6 5/8% senior notes due 2026 added 2 points to close at 74 bid.

Houston-based producer Oasis Petroleum’s issues followed the sector trend.

The 6¼% senior notes due 2026 tacked on 1¾ points to close at 90¼ bid. The 2 5/8% senior notes due 2023 jumped up 3½ points to close at 80 bid.

Steinhausen, Switzerland-based contract driller Transocean’s paper improved.

The 9.35% senior paper due 2035 improved by ½ point to close at 84½ bid.

Frontier lower

In the telecom space, Intelsat’s notes varied through the Monday session, market sources said.

Intelsat (Luxembourg) SA’s 8 1/8% senior notes due 2023 lost 1 point to close at 60 bid. The 9½% senior notes due 2023 gained ¼ point to close at 71¼ bid.

As the Luxembourg-based satellite operator and others like it prepare for a C-band spectrum auction later in the year, the market is beginning to estimate what revenue could potentially be generated.

New Street Research said on Monday that the auction could net $50 billion.

“We’re a ways off from deciding who gets what though,” a trader said.

After a series of setbacks in the regulatory and legislative spaces, the Federal Communications Commission is tasked with setting terms for the auction, including a division of revenue.

Norwalk, Conn.-based wireline communicator Frontier’s issues were under pressure.

The 10½% senior notes due 2022 lost ½ point to close at 48½ bid. The 11% senior notes due 2025 shed ½ point to close at 48 bid.

PG&E notes dip

Meanwhile, in the utilities space, PG&E’s paper dipped, traders said.

The 6.05% notes due 2034 moved down ½ point to close at 104½ bid.

The 6.05% notes saw $22 million on the tape by the close.

Last week, an informal committee of unsecured creditors asked a bankruptcy court to vacate its orders approving the San Francisco-based bankrupt electric utility’s restructuring support agreements with wildfire victims.

The group wants to pay victims $13.5 billion in cash, as opposed to the company’s plan to pay half in cash and half in equity.

© 2015 Prospect News.
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