Energy weaker, massive losses stemmed; RadioShack said to breach covenant; Claire’s debt rises

By Stephanie N. Rotondo

Phoenix, Dec. 2 – The distressed debt space continued to be lower Tuesday, though there “wasn’t as much bludgeoning,” a trader said.

“Some stuff seemed to find a bottom,” he added.

Energy names remained weak, but weren’t hit as hard as they were in the previous sessions. However, oil prices – which had gained ground in Monday trading – came back in.

West Texas Intermediate (WTI) crude oil fell $1.67, or 2.42%, to $67.33 per barrel. Brent crude oil lost $1.69, or 2.33%, to close at $70.85 per barrel.

Away from energy, RadioShack Corp. traded down after a lender said the company had breached the terms of a loan.

For its part, RadioShack is calling the allegations baseless.

Also in the retail space, Claire’s Stores Inc. paper was inching higher, ahead of the company’s earnings release on Wednesday.

Energy losses stemmed

The energy space continued to be under pressure on Tuesday, but the day’s losses were not nearly as bad as they were on Monday.

In the oil sector, California Resources Corp.’s 6% notes due 2024 rallied off the intraday low, a trader said, but still ended down a deuce at 86.

The 5½% notes due 2021 and the 5% notes due 2021 were also seen ending at 86, which the former off almost 2½ points and the latter just over half a point weaker.

Halcon Resources Corp.’s 8 7/8% notes due 2021 and 9¾% notes due 2020 were both off half a point at 68 and 68½, respectively.

In Samson Investments Co.’s 9¾% notes due 2020, those notes were called unchanged at 54½.

Among coal producers, Walter Energy Inc.’s were actually seen unchanged to better.

A trader called the 9½% notes due 2019 half a point better at 84, while the 8½% notes due 2021 held in at 24¼.

Arch Coal Inc. didn’t fare as well, however. A trader deemed the 7¼% notes due 2021 off half a point at 36½.

The 9 7/8% notes due 2019 were meantime down 3 points “from about a week and a half ago,” a trader said, placing the bonds at 42.

And, in Alpha Natural Resources Inc. paper, a trader pegged the 9¾% notes due 2018 at 63½, down a point.

Goodrich converts slip

Goodrich Petroleum Corp.’s 5% convertibles due 2032 extended losses Tuesday as shares of the struggling Houston-based oil and gas exploration and development company continued to plunge amid growing expectations that the global oil market may not return to normalcy in the short term, market sources said.

The Goodrich convertibles slipped another point to 1.5 points to 54 following a 10-point slide on Monday. Goodrich shares fell another 16% on top of a 22% plunge on Monday.

“There are solvency issues with GDP and Sanchez, which is not a convert issuer,” a New York-based trader said. “There are going to be some bankruptcies among the weaker drillers and peripheral players, as oil is going to be weak for a while; it’s not going to snap back.”

Other names in focus in the convertibles market were Energy XXI Ltd., Emerald Oil Inc., Cobalt International Energy Inc. and BPZ Resources Inc.

RadioShack slips

RadioShack announced on Tuesday that it had received a notice of a covenant breach from Salus Capital Partners on a $250 million term facility.

However, the Fort Worth, Texas-based electronics retailer called the notice “wrong and self-serving.”

A trader said the 6¾% notes due 2019 “traded down a couple points” in early trading, moving down into the low-30s. But he saw very little activity in the debt after the news came out.

Another trader placed the bonds at 32½, down 5½ points from the last trades before Thanksgiving.

The covenant breach was based on a recapitalization and investment agreement to the company’s credit facility entered into on Oct. 3.

Claire’s firm ahead of numbers

Elsewhere in the retail space, Claire’s Stores’ 7¾% notes due 2020 inched up a quarter-point to 66¾, according to a trader.

Another trader said the 8 7/8% notes due 2019 improved 1½ points to 87.

The gains came ahead of the Chicago-based jewelry stores’ third-quarter earnings release on Wednesday.

Also in the retail arena, Toys “R” Us Inc.’s 10 3/8% notes due 2017 closed at 83¼, up a quarter-point, according to a trader.

-Rebecca Melvin contributed to this review.

© 2015 Prospect News.
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