PG&E notes recover some recent losses; Adient issues fall on preliminary Q1 results

By James McCandless

San Antonio, Jan. 16 – Wednesday’s session saw the distressed space start to slowly release its grip on PG&E.

PG&E Corp.’s notes improved in trading, partially recovering after days of losses culminating in the company announcing an upcoming Chapter 11 bankruptcy filing.

Elsewhere, Adient plc’s issues dropped after the company showed mixed results in its preliminary Q1 earnings report.

In the energy space, PHI, Inc.’s paper continued to trend negative.

A topsy-turvy day for oil futures led to similar movement for distressed oil names. California Resources Corp.’s notes were mixed, Hornbeck Offshore Services, Inc.’s issues gained and Denbury Resources Inc.’s paper improved.

The retail sector’s J.C. Penney Co., Inc. and Neiman Marcus Group, Inc.’s notes were both declining. Sector peer L Brands, Inc.’s issues were mixed.

PG&E up

PG&E notes were positive after days of declines, traders said.

The 6.05% notes due 2034 rose 1¾ points to close at 82 bid. The 3.95% notes due 2047 picked up 2 points to close at 74½ bid. The 3½% notes due 2020 added ¼ point to close at 78¾ bid.

Loosening its grip slightly, the market saw 189 million of the bonds trading Wednesday.

The San Francisco-based electric utility has had its feet held to the fire in the past few weeks as the company warned of an outsized accounting charge due to potential liabilities in recent California wildfires.

The company subsequently announced that it would file for bankruptcy over the matter, recently missing an interest payment on its 2040 senior notes.

Amid the turmoil, Moody’s Investors Service and S&P Global Ratings lowered the company to junk status.

Adient drops

Meanwhile, Adient’s issues were falling on Wednesday, market sources said.

The 4 7/8% notes due 2026 fell 2¼ points to close at 75 bid.

The Dublin-based automotive seating manufacturer’s issues were under pressure after reporting what it expects its first-quarter earnings results to be.

The company is expecting revenue between $4.16 billion and $4.2 billion, in line with analyst estimates of $4.18 billion.

EBITDA is forecasted to settle at $175 million, well below expectations of $228.6 million.

“That became topical today,” a trader said. “I think some people are welcoming a break from PG&E at this point.”

PHI loses

In energy, PHI’s paper continued falling, traders said.

The 5¼% paper due 2019 shaved off 2½ points to close at 65½ bid.

On Tuesday, the 5¼% paper fell ¼ point.

The Lafayette, La.-based offshore air services name’s paper has been pushed further into distressed territory after the company terminated a tender offer for the $500 million of the outstanding paper.

The paper is due to mature in March.

Oil names mixed

As oil prices bounced around on Wednesday, distressed oil names were just as disparate, market sources said.

Los Angeles-based independent oil and gas producer California Resources’ notes, a bellwether for the distressed energy sector, traded mixed.

The 6% notes due 2024 rose ¾ point to close at 71½ bid. The 8% notes due 2022 held level at 80¼ bid.

Covington, La.-based offshore services provider Hornbeck’s 5 7/8% notes due 2020 lost 2¾ points to close at 56 bid.

Houston-based peer Denbury’s paper was rising.

The 6 3/8% paper due 2021 shifted upward ¼ point to close at 81¼ bid. The 5½% paper due 2022 added 1¾ points to close at 74 bid.

After a volatile session, West Texas Intermediate crude oil futures for Feb. delivery ended up positive by 20 cents to $52.31 per barrel.

North Sea Brent crude futures ended at $61.32 per barrel after adding 68 cents.

J.C. Penney off

The retail space saw J.C. Penney’s notes declining, traders said.

The 8 5/8% notes due 2025 dropped 1¾ points to close at 56¼ bid. The 74% notes due 2037 lost ¾ point to close at 39¾ bid.

The Plano, Texas-based department store chain sought to retain confidence from investors by announcing several appointments at the executive level and reassuring that the search for a permanent chief financial officer is running smoothly.

Meanwhile, Dallas-based luxury retailer Neiman Marcus’ issues were also negative.

The 8% notes due 2021 fell ¾ point to close at 40 bid. The 7 1/8% notes due 2028 declined by 1 point to close at 67 bid.

Columbus, Ohio-based sector peer L Brands’ paper ended mixed.

The 6¾% paper due 2036, while moving as high as 85¾ bid during trading, settled back down at Tuesday’s level of 85¼ bid, according to Trace data. The 5¼% paper due 2028 rose ½ point to close at 88 bid.

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