Energy names rise with oil, led by California Resources; Toys takes a beat; telecom in trouble

By Stephanie N. Rotondo

Seattle, Sept. 20 – There were “no real movers and shakers” in the distressed debt market on Wednesday, according to one trader.

However, he did see that “energy names were quite a bit better,” led by California Resources Corp.

Away from energy, Toys ‘R’ Us Inc.’s debt was “a lot quieter,” a trader said.

The bonds have been on the active side of late, but were the nom du jour on Tuesday when it was announced that the Wayne, N.J.-based toy retailer had filed for bankruptcy.

A trader said the 7 3/8% notes due 2018 were “probably up another 2 points” at 29.

Another source echoed that level, also deeming the paper up a deuce.

The bonds are trading flat, or without accrued interest.

The telecommunications space remained on the radar as well, with Windstream Holdings Inc. taking a hit following a downgrade from S&P on Tuesday.

Elsewhere, a trader said there was “a flurry of activity” in Techniplas LLC’s 10% notes due 2020.

“They finally found a buyer for bonds today,” the trader said, noting that the paper had been offered around, but no one was biting.

The debt traded at 70 on Wednesday, down 7 points.

Another trader also saw the issue trading “plus or minus 70,” adding that the debt “hasn’t traded in over a week, but it was at 77 last.”

The second trader also said he hadn’t seen any particular news to cause the downward move.

Energy powers up

There was “heavy volume” in California Resources’ 8% second-lien notes due 2022, the trader said. He called the issue up a deuce at 61¼.

Another trader said the issue was “pretty active” and higher on the day, trading around 61½.

Yet another source pegged the notes at 61¾, up 2¼ points.

EP Energy Corp.’s 8% notes due 2025 were also better, though not as much as CRC.

A trader saw the bonds at 74, up nearly a point.

Noble Energy Inc.’s 7¾% notes due 2024 were modestly better, adding half a point to close at 87.

In Denbury Resources Inc., the 6 3/8% notes due 2021 were deemed 2½ points higher at 55½ bid.

The gains in energy came as domestic crude oil prices rose above the $50-mark for the first time in four months.

West Texas Intermediate crude rose 81 cents, or 1.64%, to close at $50.29.

The improving price of the commodity was attributed to tensions between the U.S. and Iran, as well as hopes that OPEC would extend its output cut agreement.

Additionally, the U.S. Energy Information Administration released its weekly report. The report showed a 4.6 million-barrel gain in crude stockpiles – nearly double the 2.4 million-barrel add that analysts had expected.

Trouble in telecom

Windstream Holdings’ bonds were in decline yet again on Wednesday, as were Frontier Communications Corp.’s bonds.

A trader called Windstream’s 7¾% notes due 2020 down 1¾ points at 81. The trader also said Frontier’s benchmark 11% notes due 2025 dipped a quarter-point to 81¾, while the 7 5/8% notes due 2024 slipped half a point to 75¼.

A second market source called Windstream’s 6 3/8% notes due 2023 over 2 points lower at 71¼.

Another trader also noted that Uniti Group Inc. – Windstream’s telecom-focused real estate investment trust – “continues to be pretty active.”

The trader saw the 7 1/8% notes due 2024 sliding to 86 from 88.

“They were down at least another point today,” he said. “They’re down 3 to 4 points in the last few days.”

On Tuesday, S&P lowered Windstream’s corporate credit rating to B from B+, citing ongoing competitive pressures in its consumer business and slower ramp-up of its enterprise business.

Uniti’s credit rating was lowered in tandem.

© 2015 Prospect News.
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