Sanchez notes gain as focus shifts to energy names; California Resources issues start week mixed

By James McCandless

San Antonio, Aug. 20 – Trading in the distressed debt market started the week focused on energy names as the U.S. government plans to sell 11 million barrels of oil to keep prices down.

Sanchez Energy Corp. notes rose, following oil futures. Recently, the company reported less than stellar earnings.

California Resources Corp. issues were mixed. The company exceeded analyst expectations in a recent earnings report.

J.C. Penney Co., Inc. paper declined again. Last week, the company reported a disappointing Q2 report and received subsequent ratings downgrades.

Intelsat SA notes started the week mixed. A subsidiary recently priced a $1.25 billion issue of senior notes.

Frontier Communications Corp. issues were also mixed. The company posted disappointing earnings in a recent Q2 report.

Diebold Nixdorf, Inc. paper dropped again. One of its largest lenders is in the process of shopping a rescue loan for the financially strapped company.

Sanchez up

Houston-based independent oil and gas producer Sanchez Energy notes gained, traders said, as Monday trading shifted focus to the energy sector. Recently, the company reported a 26 cents per share loss in its Q2 earnings statement, falling below analyst expectations of 6 cents per share profit. Its oil production numbers fell short of its own estimates.

“Sanchez is a high volume trader on most days,” a trader said. “So combine that with the way oil futures moved and the upcoming sale and Sanchez really becomes a go-go name.”

The 6 1/8% notes due 2023 rose about 1¼ points to close at 55 bid.

On Friday, the 6 1/8% notes gained about 2½ points.

California Resources mixed

Los Angeles-based independent oil and gas name California Resources notes ended mixed, market sources confirmed. In its recent Q2 earnings report, the company beat analyst expectations of a 43 cents per shares loss last Thursday by reporting a 29 cents per share loss.

“The name’s a stalwart,” a trader said. “It’s going to see more attention with any oil news.”

The 6% notes due 2024 added about 2¼ points to close at around 81¾ bid. The 8% notes due 2022 lost about ¾ point to close at around 87 bid.

J.C. Penney down

Plano, Texas-based department store chain J.C. Penney notes fell again, traders confirmed. On Friday, two ratings agencies issued downgrades in response to the company’s Thursday Q2 report. Moody’s Investors Service lowered its corporate family rating and several issue-level ratings. Standard & Poor’s lowered its issuer credit rating and affirmed a negative outlook.

On Thursday, the company reported a 38 cents per share loss, falling short of analyst expectations of a 5 cents per share loss. It also posted $2.83 billion in revenue.

The 7.4% bonds due 2037 shaved off about 1¼ points to close at 47½ bid.

On Friday, the 7.4% bonds lost about 3¼ points.

Volume names trade

Luxembourg-based satellite communications company Intelsat’s notes were mixed in Monday trading. Recently, subsidiary Intelsat Connect Finance SA issued a $1.25 billion offering of senior notes due 2023.

In its recent Q2 earnings report, the company posted a 38 cents per share loss, surpassing analyst estimates of a 37 cents per share loss. It also reported $537.71 million in revenues.

The Intelsat (Luxembourg) SA 7¾% notes due 2021 picked up about 1¼ points to close at 97¼ bid. The 8 1/8% notes due 2023 lost about 3¼ points to close at 87½ bid.

On Friday, the 7¾% notes gained about 1¾ points and the 8 1/8% notes added about 1¾ points.

Norwalk, Conn.-based wireline communications name Frontier Communications issues were mixed again. Recently, in response to a negative earnings report, Standard & Poor’s downgraded its issuer credit rating, senior unsecured debt rating and affirmed a negative outlook.

The 7 5/8% notes due 2024 lost about 1¼ points to close at 66 bid. The 10½% notes due 2022 rose about ½ point to close at around 90 bid. The 11% notes due 2025 fell ¼ point to close at 79¾ bid.

On Friday, the 7 5/8% notes were level, the 10½% notes dropped ¾ point and the 11% notes added about ¾ point.

North Canton, Ohio-based connected commerce solutions company Diebold paper lost again. JPMorgan Chase & Co., one of the company’s largest lenders, is in the process of securing a $500 million rescue loan to keep the company running. The company has hired Evercore and Credit Suisse as financial advisers in a search for a potential buyer.

The 8½% notes due 2024 lost about ¾ point to close at around 60½ bid.

On Friday, the 8½% notes fell about ¼ point.

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