L Brands notes gain after earnings release; WeWork securities lower on layoff news

By James McCandless

San Antonio, Nov. 21 – Thursday’s activity in the distressed debt space saw a shift in focus to retail and utilities tranches.

L Brands, Inc.’s notes gained after the company reported earnings, meeting overall expectations for the third quarter.

Sector peer Bed Bath & Beyond Inc.’s issues were seen declining.

Coworking name WeWork Cos. Inc.’s paper moved lower after news broke of nationwide layoffs.

Meanwhile, in utilities, PG&E Corp.’s notes rose amid continuing developments in its bankruptcy case.

In telecom, GTT Communications, Inc.’s issues improved despite receiving a ratings downgrade.

Satellite operator Intelsat SA’s paper saw diverging movements.

In the face of rising oil futures, Chesapeake Energy Corp.’s and McDermott International, Inc.’s notes dipped while Whiting Petroleum Corp.’s issues were mixed.

L Brands gains

L Brands’ notes gained by the end of the day, traders said.

The 5¼% senior notes due 2028 added 1½ points to close at 92¾ bid. The 6 7/8% senior notes due 2035 rose 1¾ points to close at 86¾ bid.

After the Wednesday close, the Columbus, Ohio-based retailer released its lukewarm earnings results for the third quarter.

The company reported earnings of 2 cents per share, meeting analyst expectations.

Overall sales came in at about $2.67 billion, just shy of targets.

“The focus, as always, was how bad Victoria’s Secret did,” a trader said.

The company’s women’s wear segment had an 8% loss in sales.

“There’s a push to spin off Victoria’s Secret that’s getting louder every time these results come out,” the trader said.

An activist investor continues to apply pressure on the name, including calling for the breakup of the company.

Union, N.J.-based sector peer Bed Bath’s long-term issues declined.

The 5.165% senior notes due 2044 shaved off ¼ point to close at 67 bid. The 5.915% senior notes due 2034 fell 2¼ points to close at 70 bid.

WeWork lower

Coworking name WeWork’s paper moved lower, market sources said.

The 7 7/8% senior notes due 2025 dipped 1¼ points to close at 71 bid.

On Thursday, news broke that the New York-based startup cut 2,400 jobs nationwide, representing almost 20% of its workforce.

The anticipated move is part of the company’s cost-cutting measures brought on by its reduced valuation.

The reduction, brought on by a mishandled initial public offering, culminated in the resignation of its chief executive officer and an $8 billion rescue financing deal from SoftBank.

PG&E rises

Meanwhile, in utilities, PG&E’s notes rose, traders said.

The 6.05% notes due 2034 picked up 2 points to close at 103½ bid.

In a Wednesday filing, the San Francisco-based bankrupt electric utility sought an extension of its exclusive right to solicit votes on a Chapter 11 plan, Prospect News reported.

Specifically, the company is asking the court to extend the exclusive plan-vote solicitation period through March 20.

Also on Wednesday, California governor Gavin Newsom called for the utility to add state-appointed board members as part of its restructuring plan.

Among the conditions proposed, Newsom wants those potential board members to have greater authority granted to them if it does not meet certain safety standards.

The governor has previously said that if opposing parties cannot come to a compromise on a reorganization plan quickly, the state would take over the entity.

GTT improves

In telecom, GTT’s issues improved at the close, market sources said.

The 7 7/8% senior notes due 2024 garnered 1 point to close at 57 bid.

Late Wednesday, Fitch Ratings downgraded the McLean, Va.-based cloud networking service provider’s long-term issuer default rating, senior secured revolving credit facility rating and issue-level ratings.

The agency cited recent third-quarter underperformance in revenues and an increase in leverage.

At the same time, S&P Global Ratings revised its view to negative from stable for similar reasons.

Luxembourg-based satellite operator Intelsat’s paper diverged in direction.

Intelsat (Luxembourg) SA’s 8 1/8% senior paper due 2023 lost ½ point to close at 50 bid. The 9½% senior notes due 2023 added ½ point to close at 65 bid.

Energy bonds down

In the face of improving oil futures, distressed oil and gas tranches trended downward, traders said.

West Texas Intermediate crude oil futures for January delivery picked up $1.57 to finish Thursday at $58.58 per barrel.

North Sea Brent crude oil futures for January delivery ended at $63.97 per barrel on a $1.57 rise.

Oklahoma City-based independent oil and gas producer Chesapeake Energy’s notes dipped.

The 8% senior notes due 2025 slid 1½ points to close at 55¾ bid. The 8% senior notes due 2027 gave back ¼ point to close at 53 bid.

Houston-based oil and gas engineering name McDermott’s issues followed the trend.

The 10 5/8% senior notes due 2024 shaved off ¼ point to close at 7¾ bid.

Denver-based producer Whiting’s paper went in mixed directions.

The 6¼% senior notes due 2023 climbed ½ point to close at 69 bid. The 6 5/8% senior notes due 2026 shed ¼ point to close at 57¼ bid.

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