Avaya sees one big spike, some mixture; Neiman Marcus continues gains; Valeant rumors drive upticks

By Colin Hanner

Chicago, Jan. 25 – Though the Dow Jones industrial average flew above the 20,000 benchmark on Wednesday – brought on by some concrete executive actions by President Donald Trump after months of speculation – the distressed market was quieter in comparison, traders said, adding that volume and activity was on the quieter side.

“Not a whole lot of volume today,” a trader said, adding that the “lower echelon” of distressed names were much higher on his activity for the day.

“Things seem to be quieter today,” another trader said.

For the third-straight session, telecommunication service company Avaya, Inc. continued to see a rise in one set of its distressed securities, though two other sets were down on the session, a day after swings upward were caused by approved debtor-in-possession financing.

Retailer Neiman Marcus Group, Inc. followed Tuesday’s session with another day of gains. On Monday, the retailer retreated several points before rebounding the following session.

Valeant Pharmaceuticals International, Inc. capitalized on headlines that its Eastern European assets were gaining interest from other firms, according to a Bloomberg report that was confirmed by other media groups and a trader.

In healthcare, Community Health Systems, Inc. saw a several-point increase that broke from the past few sessions of either unchanged or very little movement.

And in the energy and production sector, several oil drillers saw an increase. In a rising-tide-lifts-all-boats scenario, executive orders by President Trump were largely seen as a boost to the energy sector on the session.

Avaya sees mixture

On Wednesday, Avaya Inc.’s 10½% notes due 2021 were doing a “good bit better,” a market source said, and traded up almost 10 points to a 33 handle.

“What the hell?” said one trader in reaction to the steep movement, while another trader said that the sharp rise could be attributable to rumors of competing plans for the newly filed Chapter 11 company that seem to be gathering steam.

“Whatever it is, it clearly seems like someone thinks they’ll be more valuable,” the trader said.

On the other hand, the 7% notes due 2019 were down ¾ point to 84 – though they reached as low as 83, a trader said – and the 9% notes due 2019 were down ¼ point to 84¾.

Neiman rebounding, again

After a Tuesday recoup of Monday’s losses, Neiman Marcus continued the gains with two sets of notes on the session.

The 8% notes due 2021 were up 1¼ points to 65¾, a trader said, while another trader said they were trading in a 66 context.

Similarly, its 8¾% notes due 2021 were up 1 1/8 points to 61.

Asked what caused the sudden fall and spike of Neiman’s distressed securities, a trader said it could be attributable to one-off technical trades that snapped back to current levels when the securities became more active.

Other than that, there was no substantial news that drove the fall-then-rise that has affected Neiman in the past month, including the contagion of big box retailers on the retail sector, the trader said.

Fellow brick-and-mortar retailer J.C. Penney Co, Inc.’s 6 3/8% notes due 2036 were down ¼ point to 81¼, a market source said.

Valeant up, Community spikes

Though the rumor mill has continued to speculate that Valeant Pharmaceuticals will undergo more asset sales to lessen the burden of its billions of dollars’ worth of debt, a trader said, a report from Bloomberg said that Valeant’s Eastern European assets are under consideration from firms for a potential sale.

The company’s issued debt rose as a result, including the 6 1/8% notes due 2025, which were up 1½ point to 77.

“The headlines are probably driving it today,” the trader said.

The 5 3/8% notes due 2020 were up 1 point to 87½, a trader said.

In the healthcare sector, Community Health System’s 6 7/8% notes due 2022 were up 2 1/8 points to 72 7/8, a split from Tuesday’s unchanged handle.

There were no apparent drivers of the increase.

Drillers, oil on the up

Though oil future prices declined on the session, it was a series of executive orders by President Trump that seemed to be a precursor to the type of relationship Trump will have with the E&P sector.

Late Tuesday, Trump signed two executive orders regarding the construction of the Dakota Access Pipeline and the Keystone XL Pipeline, respectively, two controversial measures in the eyes of environmental groups. The action, though, could mean a lax relationship with oil companies in the future.

Midland, Texas-based Legacy Reserves LP’s 6 5/8% notes due 2021 were up 2¼ points to 72, a trader said.

Offshore driller Transocean Ltd.’s 6.8% notes due 2038 were up 2 points to 80½, while Ensco plc’s 5¾% notes due 2044 were up ¼ point to 79.

Ensco’s 4½% notes due 2024 were unchanged at 87½, a market source said.

A trader said the Dow’s 20,000 euphoria may have had an influence in Noble Corp.’s 5¼% notes due 2022, which were up ¾ point to 72¾.

Rounding out distressed E&P names were California Resources Corp.’s 8% notes due 2022, up 1¾ points to 89½, according to a market source, and Denbury Resources Corp.’s 6 3/8% notes due 2021, up 1 point to 93.

Notables mixed

Satellite communications company Intelsat Jackson Holdings SA’s 7½% notes due 2021 were up ¼ point to 72½, a trader said, adding the similarly-linked 7½% notes due 2020 were up 1/8 point to 73 5/8.

Global shipper Navios Maritime Holdings, Inc.’s 7 3/8% notes due 2022 were up ½ point to 63.

And iHeartCommunications, Inc., though on “the quieter side,” as one trader said, saw a ¼-point decrease in its 7¼% notes due 2027, which finished with a 41¾ handle.

Its 14% notes due 2021 were unchanged at 37.

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