Sanchez Energy notes up with oil futures; California Resources mixed as energy news sparks trading

By James McCandless

San Antonio, Aug. 22 – Energy names came back into focus in the distressed debt market on news of falling U.S. oil inventories and Saudi Arabia’s Aramco oil company cancelling its upcoming IPO.

Sanchez Energy Corp. notes added to recent gains, following oil futures. The company recently posted disappointing earnings.

California Resources Corp. issues were mixed amid news in the energy sector that the U.S. crude oil supply fell and Aramco nixed its expected IPO.

J.C. Penney Co., Inc. paper rose. On Tuesday, the company received a ratings downgrade in response to a weak earnings report.

Intelsat SA notes were mixed. A subsidiary recently priced a $1.25 billion offering of senior notes.

Frontier Communications Corp. issues were also mixed. A recent Q2 earnings report fell short of analyst expectations.

Diebold Nixdorf, Inc. paper improved again. One of the company’s largest lenders is currently shopping a rescue loan.

Sanchez Energy rises

Houston-based independent oil and gas producer Sanchez Energy’s notes continued to trend upward, traders said, spurred by oil futures and a busy day in the energy sector. The Energy Information Administration reported that U.S. crude oil stockpiles had fallen by 5.84 million barrels, falling short of analyst expectations of a 5.17 million barrel decrease.

“That, combined with the Saudis cancelling the Aramco IPO, really lit a fire under distressed energy today,” a trader said. “Sanchez obviously bears the brunt of that.”

The 6 1/8% notes due 2023 rose about 2½ points to close at around 59 bid.

On Tuesday, the 6 1/8% notes gained 1½ points.

California Resources mixed

Los Angeles-based independent oil and gas name California Resources’ issues were mixed, market sources said. The company’s tranches, bellwethers in the distressed space, were also swept up in Wednesday’s energy news.

A recent Q2 earnings report showed the company beating analyst expectations of a 43 cents per shares loss by reporting a 29 cents per share loss.

The 6% notes due 2024l ost about ¼ point to close at around 80 ¾ bid. The 8% notes due 2022 gained ¾ point to close at 89 bid.

J.C. Penney improves

Plano, Texas-based department store chain J.C. Penney tacked on more gains, traders said, despite a string of ratings downgrades. On Tuesday, Fitch Ratings lowered the company’s long-term issuer default rating and affirmed a stable outlook.

On Friday, Moody’s Investors Service lowered its corporate family rating and several issue-level ratings. Standard & Poor’s lowered its issuer credit rating and affirmed a negative outlook.

On Thursday, the company reported a 38 cents per share loss, falling well below analyst predictions of a 5 cents per share loss. It also posted $2.83 billion in revenue.

The 7.4% bonds due 2037 traded up about 1½ points to close at 49¾ bid.

On Tuesday, the 7.4% bonds rose about ¾ point.

Volume names trade

Luxembourg-based satellite communications company Intelsat’s notes were mixed. Recently, subsidiary Intelsat Connect Finance SA priced a $1.25 billion offering of senior notes due 2023.

In a recent Q2 earnings report, the company posted a 38 cents per share loss. It also reported $537.71 million in revenues.

The Intelsat (Luxembourg) SA 7¾% notes due 2021 edged up about ¼ point to close at 97 bid. The 8 1/8% notes due 2023 lost about 2¼ points to close at around 85½ bid.

On Tuesday, the 7¾% notes lost about ½ point and the 8 1/8% notes added about ¼ point.

Norwalk, Conn.-based wireline communications name Frontier Communications issues were mixed as well. Recently, after a worse than expected earnings report, Standard & Poor’s downgraded its issuer credit rating, senior unsecured debt rating and affirmed a negative outlook.

The 7 5/8% notes due 2024 rose about ¾ point to close at around 67½ bid. The 10½% notes due 2022 lost about 1 point to close at around 89½ bid. The 11% notes due 2025 gained about 1½ points to close at around 81 bid.

On Tuesday, the 7 5/8% notes rose about ¾ point, the 10½% notes added about ½ point and the 11% notes lost about ¼ point.

North Canton, Ohio-based connected commerce solutions company Diebold paper continued rising. JPMorgan Chase & Co., one of the company’s largest lenders, is working on the company’s behalf to secure a $500 million rescue loan.

The 8½% paper due 2024 picked up 1½ points to close at 64½ bid.

On Tuesday, the 8½% paper rose about 2½ points.

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