California Resources leads energy space lower; L Brands drops after Thursday asset sale

By James McCandless

San Antonio, Dec. 14 – At the end of the week in distressed trading, the space shifted its focus to energy names.

California Resources Corp.’s notes were lower in tandem with oil futures at the top of the distressed space.

Elsewhere in energy, EP Energy Corp.’s, Ensco plc’s and Parker Drilling Co.’s issues were also negative.

Away from oil, Ferrellgas Partners LP’s paper trended lower.

In retail, L Brands, Inc.’s notes dropped a day after the company announced an asset sale to a private equity firm.

Rite Aid Corp.’s and PetSmart, Inc.’s issues were also falling.

Frontier Communications Corp.’s paper was mixed.

CalRes, energy space lower

Lower oil futures saw California Resources’ notes falling in tandem, traders said.

The 8% notes due 2022 lost 1 point to close at 75¾ bid.

The Los Angeles-based independent oil and gas producer’s notes continue to act as a bellwether for the energy sector.

“It seemed like a pretty typical day in distressed land,” a trader said. “The bellwethers were all active.”

In other distressed energy trading, Houston-based sector peer EP Energy’s issues were also lower.

The 9 3/8% notes due 2024 dropped 1¼ points to close at 52¾ bid. The 8% notes due 2025 fell 3 points to close at 47½ bid.

London-based drilling contractor Ensco’s 7¾% paper due 2026 lost ¾ point to close at 81 bid.

Also slipping were Houston-based drilling services provider Parker Drilling’s notes.

The 7½% notes due 2020 crashed 9½ points to close at 54½ bid. The 6¾% notes due 2022 fell 3 points to close at 60½ bid.

The company filed for Chapter 11 bankruptcy on Wednesday after reaching a restructuring agreement with noteholders.

At the end of the Friday session, West Texas Intermediate crude oil futures lost $1.38 to close at $51.20 per barrel. North Sea Brent crude oil was also lower, falling $1.17 to end at $60.28 per barrel.

Away from oil, Ferrellgas’ issues were also negative, market sources said.

The 6¾% notes due 2022 fell 3¾ points to close at 82 bid. The 6¾% notes due 2023 went lower by ½ point to close at 85 bid.

On Thursday, the Overland Park, Kan.-based propane company announced the acquisition of propane retailer Co-op Butane, Inc for an undisclosed amount.

The company is working to gain back positive market sentiment after a series of setbacks, including suspending quarterly cash distributions and the resignation of its chief financial officer and chief operating officer.

L Brands, retail off

Meanwhile, in retail, L Brands’ paper declined, traders said.

The 5¼% paper due 2028 shed 2 points to close at 89¼ bid. The 6¾% paper due 2036 lost ¾ point to close at 86¾ bid.

The Columbus, Ohio-based retailer announced the sale of luxury lingerie brand La Senza to private equity firm Regent LP on Thursday after a prolonged search for a buyer.

While the paper has been falling further into distressed territory for most of the year amid pressure in the retail sector, the paper has been on the rise recently after outperforming November sales expectations.

Camp Hill, Pa.-based drug store operator Rite Aid’s notes were losing on Friday.

The 7.7% notes due 2027 fell ½ point to close at 71 bid. The 6 1/8% notes due 2023 edged down ¼ point to close at 84 bid.

Phoenix-based pet supplies retailer PetSmart’s issues dropped.

The 8 7/8% notes due 2025 lost 3 points to close at 62¼ bid. The 5 7/8% notes due 2025 slipped ¼ point to close at 73½ bid.

Frontier mixed

Frontier’s paper was mixed Friday, market sources said.

The 7 5/8% paper due 2024 declined by ¾ point to close at 53¼ bid. The 10½% paper due 2022, trading as low as 72½ bid during the session, ended Friday level at 74 bid, according to Trace data. The 11% paper due 2025 gained 1 point to close at 66½ bid.

“Telecom, especially Frontier, should be in a holiday limbo pattern for the next few weeks,” a trader said. “We don’t expect any catalyst to send it uniformly higher or negative until the new year.”

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