J.C. Penney bonds and loans were higher this morning after the company released better-than-expected quarterly results and improved guidance for the year ahead. Credit protection costs were essentially halved, and shares gained, with JCP trading up roughly 14% on the NYSE, at $9.50 per share.
The 5.65% notes due 2020 surged six points, to 91/92, according to sources, while the 8.125% notes due 2019 added roughly four points, with trades reported at 101 and 101.5. Long-tenor 6.375% bonds due 2036, meanwhile, jumped 10 points, to 73/74, the sources added.
Over in the loan market, J.C. Penney covenant-lite term debt due 2018 (L+500, 1% floor) is also firmer following the results, rising about a point to bracket 99, according to sources.
In the CDS marketplace, five-year protection costs were chopped down approximately 47%, to 4.8/6.6 points upfront, according to Markit. That’s essentially $500,000 cheaper, at $570,000 for an upfront payment, in addition to the $500,000 annual payment, to protect $10 million of the issuer’s bonds.
Comparable store sales grew 4.1% for the fourth quarter and 4.5% for the full year, according to the company statement. Full-year adjusted EBITDA surged $435 million year over year, to $715 million, besting both the company guidance for $645 million and the S&P Global Market Intelligence consensus mean estimate for $648 million.
Management cited a renewed focus on private brands and omnichannel sales, as well as effective inventory management. Looking ahead, the company put forth guidance for 2016 EBITDA to be $1 billion, the filing showed.
The Plano, Texas–based company is rated CCC+/Caa2. S&P today placed the ratings on CreditWatch with positive implications due to the improved fourth-quarter results and 2016 guidance, which includes a same-store sales increase of 3–4% with further margin improvements. — Matt Fuller/Kerry Kantin
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