PG&E crashes on bankruptcy news; Ensco mixed as company seeks to alter Rowan deal

By James McCandless

San Antonio, Jan. 14 – A new week in the distressed space saw most of the popular names boxed out by PG&E.

PG&E Corp.’s notes saw multi-point drops after the company announced that it would file for Chapter 11 bankruptcy.

The news was also a drag on Topaz Solar Farms LLC’s issues. The company relies on PG&E as its sole customer.

Meanwhile, in oil and gas Ensco plc’s and Rowan Cos. plc’s paper was mixed after Ensco submitted a new exchange rate proposal for its acquisition of Rowan.

Another decline in oil futures led to mixed trading for California Resources Corp.’s notes while Bristow Group Inc.’s issues saw a boost.

Ultra Petroleum Corp.’s paper was trending lower after a stretch of inactivity.

Elsewhere, Teva Pharmaceutical Industries Ltd.’s notes were lower as Mallinckrodt plc’s issues held firm.

PG&E bankrupt

PG&E’s notes tanked on Monday, traders said.

The 6.05% notes due 2034 dropped 7½ points to close at 80½ bid. The 3.95% notes due 2047 lost 2¼ points to close at 73½ bid. The 3½% notes due 2020 shed 9 points to close at 80¾ bid.

The three tranches combined saw $385 million of the bonds trade hands.

The San Francisco-based electric utility company announced plans to file for Chapter 11 bankruptcy on Monday after a week of market speculation and ratings downgrades from Moody’s Investors Service and S&P Global Ratings.

It had warned that it could possibly incur a large accounting charge from potential liabilities in recent California wildfires.

Over the weekend, chief executive officer Geisha Williams resigned.

“This is what today was about,” a trader said. “There was almost nothing else, relatively. It’s remarkable how much of it is flying around. The structure is going to be a distressed staple for a while.”

The pressure spread to Tempe, Ariz.-based solar farm Topaz Solar’s issues, which counts PG&E as its sole customer.

The 5¾% notes due 2039 traded down ¾ point to close at 90¼ bid.

Oil names mixed

Meanwhile, in the energy space Ensco’s paper was mixed, market sources said.

The 7¾% paper due 2026 added ¼ point. The 7.2% paper due 2027 lost 2¾ points to close at 76¼ bid.

On Monday, the London-based contract driller proposed an alteration to the stock exchange ratio for its $2.4 billion bid, suggesting an exchange of 2.6 of its shares for each share of Houston-based Rowan.

The original proposed rate was set at 2.215 shares.

The new ratio would lower the market capitalization of Rowan.

Last week, a large Rowan shareholder announced its intention to oppose the acquisition in a shareholder vote.

“It’s all a bit more fluid than people like,” a trader said. “But really, none of the deals that are happening in oil look completely solid.”

Rowan’s notes were also mixed.

The 4¾% notes due 2024 traded down 1¼ points to close at 79 bid. The 7 3/8% notes due 2025 gained 1 point to close at 86¼ bid.

As oil futures declined on Monday, trading in distressed energy names moved in different directions.

Los Angeles-based independent oil and gas name California Resources’ issues were mixed.

The 6% notes due 2024 picked up 1½ points to close at 71½ bid. The 8% notes due 2022 lost ½ point to close at 79½ bid.

Houston-based offshore transportation company Bristow’s 6¼% paper due 2022 rose 6 points to close at 52 bid.

Houston-based producer Ultra Petroleum’s notes were moving downward.

The 6 7/8% notes due 2022 shaved off ¼ point to close at 36 ¼ bid. The 7 1/8% notes due 2025 dropped 4 points to close at 26¼ bid.

On Monday, West Texas Intermediate crude oil futures for February delivery lost $1.08 to close the session at $50.51 per barrel.

North Sea Brent crude futures dropped $1.49 to end at $58.99 per barrel.

Teva lower

In pharmaceuticals, Teva’s issues were lower, traders said.

The 3.15% notes due 2026 lost ¾ point to close at 82 bid. The 4.1% notes due 2046 also dropped ¾ point to close at 69¼ bid.

The Petah Tivka, Israel-based drug maker’s issues have been trading higher over the last month after settling a dispute over a generic version of one of sector peer Amgen’s drugs.

Staines-Upon-Thames, U.K.-based peer Mallinckrodt’s paper was active but level.

The 4¾% paper due 2023, while trading as low as 74 bid during the day, ended the session at 76 bid, according to Trace data.

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