Murray Energy tops gainers on ‘heavy volume’; Rent-A-Center mixed after disappointing quarter; Hexion up

By Colin Hanner

Chicago, Feb. 14 – As the equity market touched new highs on Tuesday, several issues in the distressed arena were lifted as well, with a private coal producer seeing some of the biggest gains of the day, traders said.

St. Clairsville, Ohio-based Murray Energy Corp. was up in its sole distressed issue on “heavy, heavy volume,” a trader said, adding that they were the biggest mover on the session.

“Murray’s gains came after Foresight [Energy LP] reported fourth quarter revenue,” a trader said. Murray has about a 50% stake in Foresight Energy.

In other company-driven moves, Rent-A-Center, Inc. was a “smidge off the lows” in two issues, traders said, a day following the release of worse-than-expected quarterly results. A minority stakeholder in Rent-A-Center also sent a letter during the session asking the company to look for alternative strategies, including a potential sale, several media outlets reported.

Columbus, Ohio-based chemical company Hexion, Inc. posted its third-straight session of gains on Tuesday, traders said.

Media company iHeartCommunications, Inc. saw gains in two sets of its distressed notes, Neiman Marcus Group, Inc. was significantly higher in both of its issues, a group of exploration and production names moved in both directions and several one-off distressed names traded mixed on the day.

Murray soars

It was the preliminary quarterly results of Foresight Energy, a thermal coal producer, that lifted Murray Energy’s distressed notes on the day, traders said.

Murray owns approximately 50% of the limited partner interest in Foresight Energy, according to a news release.

A trader said that Murray’s 11¼% notes due 2021 were “very active” and were up 4 points to 79¼. Another trader said he saw the same levels, adding the issues traded 61 times during the session.

During Monday’s session, a trader said the same notes were down 1¼ points to 75.

Rent-A-Center mixed

Though disappointing fourth quarter results weighed on Rent-A-Center’s stocks on the session, its distressed bonds were up a “smidge off the lows,” a trader said.

“Both [issues] opened lower and rebounded throughout the day,” the trader said.

The 6 5/8% notes due 2020 were up 1 point to 85½, a market source said, with a trader saying the notes also traded “north of 85.”

One trader said the 4¾% notes due 2021 were down ½ point to 77¼ on the session, though another trader said they touched as low as 75¼ on the day and printed at 77 later in the day, leading him to say the notes were “pretty much unchanged” on Tuesday.

For the rent-to-own furniture and electronics retailer, the fourth quarter proved to be a difficult one.

“As previously announced, the fourth quarter proved to be much more challenging than expected,” said Mark E. Speese, interim chief executive officer of Rent-A-Center, adding that point-of-sale system outages, high delinquency rates and high promotional activity added to the company’s downturn.

Adding to the results, Engaged Capital LLC, a 12.9% stakeholder in Rent-A-Center, asked the company to consider a potential sale of the company in a letter to the company.

Rent-A-Center responded, adding that the board of directors will “continue to evaluate opportunities to enhance stockholder value and is committed to pursuing the right course of action for all Rent-A-Center stockholders,” according to a news release.

Hexion persists

The specialty chemical company continues to move higher.

Hexion, Inc.’s 9% notes due 2020 were up 2 points to 79 5/8, a trader said. A market source said the notes “continued to move up” and were up by the same margin but traded as high as 79¾.

Since Friday, the notes have gained 3¾ points.

iHeart climbs

A day following an upgrade by S&P, which raised the company’s credit rating to CCC from SD, iHeartCommunications’ notes continued to climb, traders said.

The 9% notes due 2021 were up 1½ points to 77, a trader said.

And the 14% notes due 2021 were up ¾ point to 39½.

Neiman reverses recent trends

Following a rut in the distressed market for the better part of the past week-and-a-half, retailer Neiman Marcus Group posted gains in two of its notes on the session.

The 8% notes due 2021 were up 1½ points to 57¼, a trader said. Another trader said the notes finished with a 57½ handle.

The 8¾% notes due 2021 were up 1¼ points to 52¾, a market source said.

E&P mixed

Several names in the E&P sphere traded both ways on the day, though Energy Future Holdings Corp. led the way with a gain in its 11¼% notes due 2017, which were up ½ point to 88½, a trader said.

According to a Reuters report, Energy Future began its bankruptcy hearing on Tuesday with a plan to exit bankruptcy, including a sale of the company to NextEra Energy Inc. for around $18 billion in an effort to repay creditors.

Oil and natural gas developer and acquirer Legacy Reserves LP saw a ½-point decrease in its 6 5/8% notes due 2021, a trader said.

And offshore drilling contractor Diamond Offshore Drilling, Inc. followed with a similar ½-point decrease in its 4 7/8% notes due 2043 to finish at 75.

One-off roundup

Independent power producer Talen Energy Corp.’s 4.6% notes due 2021 were “pretty much unchanged,” according to a trader, and remained with an 82 7/8 handle.

Valeant Pharmaceuticals International, Inc.’s 5 3/8% notes due 2020 were up 1¼ points to 89, a trader said.

Satellite telecommunications company Intelsat SA’s 8 1/8% notes due 2023 were up 1¼ points to 37 1/8.

And Genworth Financial Inc.’s 3.042% notes due 2066 were up “close to 5 points” at 44, a trader said.

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