Chaparral drops; Tenneco leads auto parts lower; Weatherford rebounds; Dean Foods gains

By Abigail W. Adams

Portland, Me., May 9 – Earnings-related news continued to drive activity in the distressed debt space with weak earnings and weak guidance translating into a weak tape, sources said.

Chaparral Energy Inc.’s 8 ¾% senior notes due 2023 dropped in active trading after reporting disappointing numbers.

Tenneco Inc.’s junk bonds also got crushed during Thursday’s session after reporting weak numbers and a delay in a previously announced spinoff.

The drop in Tenneco’s junk bonds dragged down the auto parts manufacturing sector with several other names trading down in kind.

While under pressure on Wednesday after delaying its earnings reports, Weatherford International plc’s 5 1/8% senior notes due 2020 were rebounding on Thursday.

Dean Foods Co.’s junk bonds also continued to move higher on Thursday, continuing the upward momentum seen since its earnings report.

Chaparral drops

Chaparral Energy’s 8¾% senior notes due 2023 saw a multipoint drop in active trading on Thursday after reporting disappointing numbers.

The 8 ¾% notes were down 4 points to change hands around 68 ¾, sources said. More than $14 million of the bonds were on the tape by the late afternoon.

Chaparral reported a net loss of $103.5 million, or $2.28 per share, for the first quarter, according to a company news release.

The numbers missed expectations, a source said.

Tenneco down

Tenneco’s capital structure was also under pressure after releasing disappointing earnings and announcing a delay in a planned spinoff of one of the company’s units, sources said.

The 5% senior notes due 2026 dropped 4 points in intraday trading but pared its losses as the session progressed and was down about 3 points, sources said.

The 5% notes were changing hands around 78 with more than $12 million of the bonds on the tape.

Tenneco reported earnings of 52 cents per share which missed estimates for 94 cents per share.

Full year guidance was also lowered to between $17.7 billion and $18.1 billion from its previous guidance of between $18.2 billion and $18.4 billion.

In addition to earnings news, Tenneco’s junk bonds were trading down on the announcement of a delay for the spinoff of one of its powertrains parts businesses from its aftermarket parts business until mid-2020.

The drop in Tenneco’s junk bonds dragged down other names in the auto parts sector, a market source said.

Delphi Technologies plc’s senior notes were also down about 1 point on Thursday, a source said.

Weatherford rebounds

Weatherford’s 5 1/8% senior notes due 2020 were rebounding on Thursday after taking a hit in the previous session.

The 5 1/8% notes rose about 2 3/8 points to change hands around 73 7/8 in the late afternoon, according to a market source.

About $8 million of the bonds were on the tape during Thursday’s session. The notes were trading down on Wednesday after the company delayed the release of its earnings report.

The earnings report was scheduled to be released on Wednesday but was delayed until Friday.

Dean Foods gains continue

Dean Foods’ junk bonds continued their upward momentum on Thursday. The 6½% senior notes due 2023 rose 2½ points to 60 5/8 during Thursday’s session, sources said.

The notes remained active with more than $13 million of the bonds on the tape by the late afternoon.

Dean Foods’ paper has been on the rise since its earnings report on Tuesday.

While Dean Foods continues to post losses, the notes were moving higher as the food and beverage company continues to explore a sale of its units.

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