Sears notes crash on reports that company is prepping for bankruptcy; energy paper sinks

By James McCandless

San Antonio, Oct. 10 – As equity markets tumbled in Wednesday’s session, distressed securities followed suit.

After numerous reports surfaced overnight that the company is preparing to file for bankruptcy, Sears Holdings Corp.’s notes crashed.

The weakness spread to competitors J.C. Penney Co., Inc. and Neiman Marcus Group Inc.

Energy names were also weaker amid the equity market decline, with bellwether names Sanchez Energy Corp. and California Resources Corp. mostly lower.

Sable Permian Resources, LLC’s paper also moved lower.

Westmoreland Coal Co.’s notes have fallen after the company filed for bankruptcy on Tuesday.

Amid the negativity, FerrellGas Partners, LP’s issues saw a bright spot.

In telecom, Wind Tre SpA’s notes declined even as the company received a ratings upgrade.

In trading, Sears’ notes were largely negative, traders said.

The 7% bonds due 2032 lost 4¼ points to close at 48 bid. The 8% notes due 2019 dropped 13¾ points to close at 12¼ bid.

Overnight and early Wednesday morning, news broke that the company had hired M-III Partners as advisors in preparing a bankruptcy filing.

The company’s 6 5/8% notes that are coming due next Monday lost 43½ points, trading at 44½ bid.

Meanwhile, competing Plano, Texas-based department store chain J.C. Penney saw its 8 5/8% notes due 2025 lose ¾ point to close at 67¼ bid.

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