Community Health closes out week on high note; Neiman Marcus unchanged despite IPO fizzle; E&P nearly flat

By Colin Hanner

Chicago, Jan. 6 – The shortened holiday week bookended with continued strength in the hospital sector in the distressed arena on Friday, as the same players continued to build on gains seen throughout the week.

“This week has seen all the same strength in the hospital sector,” a trader said, pointing to the upticks by hospital group Community Health Systems, Inc., which the trader said seemed to “go up every day.”

Pharmaceutical company Valeant Pharmaceuticals International, Inc. changed course on Friday and dipped off the three-day gain it had seen since the beginning of the new year.

Following rather dismal news coming out of mainly brick-and-mortar retailers on Thursday – especially Macy’s, Inc. and Sears Holdings Corp. – distressed retailer Neiman Marcus Groups, Inc. announced Friday that it was withdrawing its registration for an initial public offering nearly a year and a half after filing for it, another troubling sign that the retailer is reconsidering the trajectory of the company going forward.

Oil did not straggle too far from the start of the day, and neither did any exploration and production distressed names. GenOn Energy Corp. was trading slightly higher, as were Anadarko Petroleum Corp. and Pacific Drilling Co.

Samson Investment Co. (Samson Resources) also jumped several points on the day off news of a settlement deal, and iHeartCommunications, Inc. coasted lower heading into the weekend.

For the first week back from the holidays – and the beginning of a new year – trading in distressed land seemed to rebound from the non-active pre-holiday lull, according to traders.

“It was a buying-thon,” a trader said. “There wasn’t a lot of new issue [so] guys were putting money to work. A lot of stuff was grinding higher [and] tighter.”

Highlights from healthcare

From an asset sale on Tuesday to capitalizing on concrete progress to breakdown the Affordable Care Act and shakeup the healthcare community, Community Health saw a week of nearly-all gains in its distressed securities.

Notably, its 8% notes due 2019 were up 1 point to 89 on “heavy volume,” a trader said.

“These just go up every day,” he said.

Also seeing a swift uptick were its 6 7/8% notes due 2022, which were up 1 1/8 points to 76 1/8, as well as its 5 1/8% notes due 2021, which were up 1¼ point to 95½, a market source said.

In the pharmaceutical realm, Valeant reversed course on Friday and went south, specifically in its 5 7/8% notes due 2023, which were down 1¼ points to 77½, a trader said.

Endo Finance Co. (Endo Pharmaceuticals plc)’s 6½% due 2025 were unchanged at 85¼, a trader said.

Neiman flat despite IPO withdraw

On Friday, Neiman Marcus joined the list of retailers who were take measures in the face of a shifting retailscape that is increasingly moving toward online purchasing.

The luxury retailer withdrew its registration for an initial public offering, which had previously been filed on Aug. 4, 2015.

“The company has determined that it is not in its best interests to proceed with the initial public offering contemplated by the registration statement at this time,” according to a filing with the Securities and Exchange Commission on Friday.

A trader said Neiman’s 8% notes due 2021 remained unchanged at 69½ despite the news. The securities “stayed mostly the same” despite being dragged down previously by other retailers like Macy’s and Kohl’s Department Stores, Inc., a trader said.

Feeling similar uneasiness in the shifting market, L Brands Inc., a company that has several securities trading with a high-yield grade, announced on Friday it was shuttering all of its Limited stores at the close of business on Sunday and will sell merchandise only online.

Retail round-up

Claire’s Stores Inc. closed out the week with another gain in its 9% notes due 2019, which were up ½ point to 53¼.

J Crew Group, Inc. also jumped in its 7¾% notes due 2019, which were up 1 point to 44 5/8.

E&P steady

There were no true significant moves in oil prices on Friday – West Texas Intermediate crude was up 2 cents, or 0.04%, to $53.74, while Brent crude was unchanged at $56.89 at market close – and distressed E&P reaped modest gains for the commodity’s steadiness.

GenOn Energy’s 9½% notes due 2018 were up ½ point to 71½, a market source said.

A trader said Anadarko Petroleum Corp.’s 0% notes due 2036 were up 3/8 point to 41¾.

Pacific Drilling’s 5 3/8% notes due 2020 were up 5/8 point to 36¾, a trader said.

MEG Energy Corp.’s 7% notes due 2024 were up ¾ point to 94¼, a market source said.

After its distressed notes climbed higher Thursday after the company announced it may not be able to make a $37.5 million deficiency payment on its senior secured reserve-based credit facility on Feb. 2, Vanguard Natural Resources, LLC’s 7 7/8% notes due 2020 were up 2¾ points to 64¾, a market source said.

Samson jumps

Samson Resources Corp. announced on Friday that it had reached a global settlement on the terms of a consensual Chapter 11 plan, according to a notice filed Friday with the U.S. Bankruptcy Court for the District of Delaware.

Following shaky ground between junior creditors and the company earlier in the week, according to a report in The Wall Street Journal, the company’s distressed notes jumped on news of the settlement Friday.

A trader saw the 9¾% notes due 2020 up “around 1 point” to 7-and-slightly-higher zip code.

“The last place they were trading before Christmas was close to the 6 level,” a trader said.

The parties to the agreement include the official committee of unsecured creditors appointed for Samson’s bankruptcy case, the agents for the company’s first-lien and second-lien debt and the company’s equity owners.

In light of the global settlement, Samson said the Jan. 6 hearing on approval of the previous disclosure statement filed by the company and the committee was continued to Jan. 11.

At the Jan. 11 hearing, the parties will seek approval of the disclosure statement for the joint global settlement plan and ask the court to set deadlines for voting, objections and related matters so that the plan confirmation hearing can be held during the week of Feb. 13.

iHeart drifts

Though no news seems to be accounting for the continuing drift of iHeartCommunications, Inc.’s distressed securities, traders said the 14% notes due 2021 were as low as 36 on Friday, down “about another point,” according to one trader.

The 10% notes due 2018 were down “almost 1 point” as well to a 73½ handle, a trader said.

Caroline Salls contributed to this review.

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