Exela continues on downward track; Ensco Rowan sees upward push

By James McCandless

San Antonio, May 24 – The last day of the week in distressed trading had an abbreviated session due to the holiday weekend.

Exela Intermediate LLC, a subsidiary of Exela Technologies Inc., saw its notes continue to slide on negative attention.

Meanwhile, Ensco Rowan plc’s issues saw a recovery from Thursday’s loss after announcing that it would stop quarterly dividends.

As oil futures improved EP Energy Corp.’s and Halcon Resources Corp.’s paper dropped and Weatherford International plc’s notes closed mixed.

Retailer L Brands, Inc.’s issues improved a few days after releasing positive earnings results for the first quarter.

Elsewhere in the sector, PetSmart, Inc.’s paper was on the rise.

Drugmaker Mallinckrodt plc’s notes were also positive as Teva Pharmaceutical Industries Ltd.’s issues were relatively active but level.

Exela down

Exela’s notes continued on a downward track in Friday’s session, traders said.

The 10% notes due 2023 dropped 3¼ points to close at 77¾ bid.

By the time the market closed early, there was $39 million on the tape.

On Thursday, the 10% notes lost 7½ points.

The subsidiary of the Irving, Texas-based business software company’s structure has seen a rapid push into distressed territory after a first quarter-earnings report earlier in the month.

The report showed declining revenues as the company works to adjust to a shifting sector.

In response, Moody’s Investors Service downgraded its corporate family rating and issue-level ratings.

At the beginning of May, the notes were trading at par.

Ensco Rowan better

Meanwhile, in oil and gas, Ensco Rowan’s issues saw a better day, market sources said.

The 7¾% notes due 2026 gained 1½ points to close at 77¼ bid. The 4½% notes due 2024 picked up 1 point to close at 71½ bid.

The London-based contract driller saw negative attention on Thursday after announcing that it would be suspending its quarterly cash dividend of 1 cent.

The dividend would have been a holdover from Ensco’s operations before it merged with sector peer Rowan in April.

“More often than not that’s the pattern,” a trader said. “Slight overreaction one day and correcting that the next day.”

Oil up

Distressed energy tranches were mixed as oil futures improved, traders said.

Houston-based independent oil and gas producer EP Energy’s paper fell.

The 8% paper due 2024 shed 1¼ points to close at 66¾ bid. The 8% paper due 2025 lost 1 point to close at 32¾ bid.

Houston-based producer Halcon Resources’ notes rose.

The 6¾% notes due 2025 dropped 1¾ points to close at 44 bid.

Baar, Switzerland-based oilfield services provider Weatherford’s issues finished mixed.

The 8¼% notes due 2023 tacked on 1 point to close at 56¾ bid. The 9 7/8 notes due 2024 fell ¾ point to close at 55¼ bid.

West Texas Intermediate crude oil futures for July delivery added 72 cents to close the week at $58.63 per barrel.

North Sea Brent crude oil futures for July delivery finished at $68.69 per barrel after a 93-cent jump.

L Brands, PetSmart better

Elsewhere, in retail, L Brands’ paper was on a positive run, market sources said.

The 6¾% paper due 2036 garnered 1 point to close at 86¼ bid. The 5¼% paper due 2028 also ended 1 point better to close at 89½ bid.

The Columbus, Ohio-based retailer has seen positive attention in the last few days of the week after issuing its first-quarter earnings report late Wednesday.

The company reported a 14 cents per share profit, beating analyst predictions of breaking even.

Due to a 15% rise in sales in its Bath & Body Works division, sales were reported at about $2.6 billion.

Phoenix-based pet supplies retailer PetSmart’s notes were also following an upward trend.

The 8 7/8% notes due 2025 added 1¼ points to close at 89¾ bid. The 5 7/8% notes due 2025 gained ¼ point to close at 92¼ bid.

Mallinckrodt gains, Teva flat

In the health care space, Mallinckrodt’s issues spent the holiday-shortened day gaining, a trader said.

The 5¾% notes due 2022 picked up 1¼ points to close at 81¼ bid. The 5½% notes due 2025 rose ¾ point to close at 67 bid.

The company has also been under pressure this week after announcing that it has sued Medicare officials over a policy change reducing past and present rebate payouts.

Barring any changes, the name may be on the hook for up to $600 million in back payments.

Petach Tikva, Israel-based sector peer Teva’s paper was relatively active but ended flat.

The 2.2% paper due 2021, while moving as high as 94¾ bid during the day, ended level at 94¼ bid.

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