California Resources, EP Energy gain as oil goes higher; Valeant ticks up; Hertz quiets

By Colin Hanner

Chicago, June 28 – Though volume remained consistent in the distressed debt market on Wednesday, there was “limited action” in bond movement ahead of the holiday week, a market source said, with recently trending issues remaining in the mix, most notably those in the exploration and production sector.

Oil prices continued to build for the fourth-straight session following a plunge last week, with California Resources Corp. again leading the sector in volume, though it was only up fractionally. EP Energy Corp. followed with a similar gain in one of its issues.

For the third straight session, Valeant Pharmaceuticals International, Inc. saw marginal gains in two of its issues following speculation around a potential debt-equity swap.

Rite Aid Corp. notes remained active and were volatile within a point range, a market source said, with the decision of the Federal Trade Commission looming on its proposed merger with Walgreens Boots Alliance.

Car rental company Hertz Global Holdings Inc. traded, though was “a good bit quieter with not much trading at all” on Tuesday, after two days of activity following rumors of a potential Apple Inc. partnership.

Several one-off names, Windstream Communications Corp. and Hexion Inc. among them, saw some movement on the session.

Energy names trade higher with data

Investors were clamoring for data that supported a continued rise in oil prices on Wednesday, as oil inventory data flopped compared to estimates.

Though weekly figures from the Energy Information Administration showed that crude oil inventories increased by more than 100,000 barrels – a stark difference from estimates that had inventories dropping by nearly 3 million barrels – investors took solace in gasoline inventory, which showed inventory decreasing by 900,000 barrels last week, which are still “above the upper limit of the average range,” the report said.

West Texas Intermediate crude oil was up 50 cents, or 1.13%, to $44.74.

Among the day’s gainers, California Resources’ 8% notes due 2022 were up ¼ point to a 62 to 62½ zip code, market sources said.

EP Energy Corp.’s 9 3/8% notes due 2020 were up ¼ point to 76¼, while its 8% notes due 2025 were unchanged at 73½.

Noble Holdings International Ltd.’s 7¾% notes due 2024 were up 5/8 point to 78½.

Pacific Drilling Co.’s 5 7/8% notes due 2020 were up 2½ points to 45½.

Offshore drilling contractor Transocean Ltd.’s 7½% notes due 2031 were unchanged at 80.

On the other hand, Candian oil sands producer MEG Energy Corp.’s 7% notes due 2024 were down ¾ point to 76½.

Elsewhere in energy, electricity producer and distributor FirstEnergy Corp. was up ¾ point in its 6.80% notes due 2039, which finished at 40.

Valeant mirrors gains, Rite Aid ‘volatile’

Speculation of a debt-equity swap, and its potential effects if implemented, continued to be up in the air as its notes traded higher on Wednesday, though the positives seemed to outweigh any negatives.

Its 5 7/8% notes due 2023 were up ½ point to 86, a market source said, while the 6 1/8% notes due 2025 were up ¾ point to 85.

The potential of a debt-equity swap could drive down the company’s debt, a market source said, thereby driving its trading debt higher.

Rite Aid Corp. was “quieter though it seemed volatile” in its 6 1/8% notes due 2023, which were trading in the 95½ to 96½ area, a market source said, in comparison to its 96 7/8 handle on Tuesday.

A decision is expected to be handed down from the FTC soon in connection to the company’s proposed merger with Walgreens.

Hertz ‘quiets’

Two sessions following news that Hertz leased out a fleet of Lexus SUV’s to Apple Inc. for its self-driving car unit, which spun into speculation that the two may form a partnership at some point in the near future, the rental car company quieted on Wednesday.

Its 5½% notes due 2024 were up ½ point to 81, a market source said, while the 7 5/8% notes due 2022 continued to hover around par.

Distressed roundoff

Issues not typically in the daily mix were trading on Wednesday, a trader said.

Windstream Communications’ 6 3/8% notes due 2023 were up 1/8 point to 81½.

Chemical company Hexion was unchanged in its 13¾% notes due 2022, which finished at 89.

In the retail space, volume was low, though Neiman Marcus Group Inc.’s 8% notes due 2021 were up ½ point to 54¾, while its 8¾% notes due 2021 were up ¼ point to 48 1/8.

And Claire’s Stores Inc.’s 9% notes due 2019 were up ½ point to 51.

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