Western Digital up despite earnings miss; Halcon Resources lower after ratings downgrade

By James McCandless

San Antonio, Jan. 25 – Issuers that traded actively in the holiday-shortened week ended mostly higher on Friday as the distressed market gears up for earnings season.

Western Digital Corp.’s notes were on the rise despite reporting an earnings and revenues miss in their quarterly results after the market close on Thursday.

Elsewhere, Halcon Resources Corp.’s issues were lower following a late Thursday ratings downgrade.

In other oil trading, rising oil futures served as a background for gains for Weatherford International plc’s paper while Denbury Resources Inc.’s and YPF SA’s notes ended mixed.

Meanwhile, in telecom, Altice SA’s issues were better as its American subsidiary sells new 10-year notes.

Sector peer Intelsat SA’s paper was also positive.

Electric utility PG&E Corp.’s notes were mixed as the company draws nearer to filing for bankruptcy.

FirstEnergy Solutions Corp., a subsidiary of FirstEnergy Corp., saw their issues gaining.

Western Digital rises

Western Digital’s notes rose at the end of the week, traders said.

The 4¾% notes due 2026 gained 1¼ points to close at 91 bid.

Late Thursday, the San Jose, Calif.-based data storage manufacturer released its second-quarter earnings report.

The company posted earnings of a $1.45 per share profit, missing analyst estimates of a $1.50 per share profit.

It also reported revenue of $4.23 billion.

The company’s notes have been under pressure in the last few months, largely due to its ties to Apple.

Halcon lower

In the oil space, Halcon’s issues closed lower, market sources said.

The 6¾% notes due 2025 shed 2¼ points to close at 78¼ bid.

The Houston-based independent oil and gas producer’s notes have been on a two-day negative streak.

On Friday, Moody’s Investors Service lowered its speculative grade liquidity rating and changed its outlook to negative.

“They’re one of the smaller producers,” a trader said. “If the oil space keeps tightening, it’s going to be hard for them to scale production.”

Oil mixed

Modest gains for oil futures did not lead to uniform trading in distressed oil names, traders said.

Baar, Switzerland-based oilfield services name Weatherford’s paper was seen gaining in the Friday session.

The 8¼% paper due 2023 added ½ point to close at 63½ bid. The 9 7/8% paper due 2024 rose 1 point to close at 65 bid.

Houston-based independent producer Denbury’s notes ended mixed.

The 6 3/8% notes due 2021 picked up ¾ point to close at 82¾ bid. The 5½% notes due 2022 were level at 72½ bid.

Buenos Aires-based sector peer YPF’s issues were also mixed.

The 31.354% notes due 2020 held firm at 41¼ bid. The 18.417% notes due 2020 jumped 1 point to close at 40½ bid.

West Texas Intermediate crude oil futures for March delivery picked up 56 cents to close the day at $53.69 per barrel.

North Sea Brent crude futures for March delivery ended at $61.64 per barrel after rising 55 cents.

Altice better

Elsewhere, in telecom, Altice’s paper was better, market sources said.

The 7 5/8% paper due 2025 saw a 1 point boost to close at 81 bid.

On Thursday, Altice USA, a subsidiary of the Amsterdam-based telecom name, priced an upsized $1.5 billion issue of 10-year senior notes at par to yield 6½%, Prospect News reported.

The subsidiary also received commitments to refinance its revolving credit facility with a $2.56 billion revolver on Friday.

“It’s one of the more topical names in the last few days,” a trader said.

Luxembourg-based sector peer Intelsat’s notes were better at Friday’s end.

Intelsat Jackson Holdings SA’s 5½% notes due 2023 gained ½ point to close at 90 bid. Intelsat (Luxembourg) SA’s 8 1/8% notes due 2023 rose 1¼ point to close at 81¾ bid.

PG&E mixed

Electric utility PG&E’s issues ended another active week mixed, traders said.

The 6.05% notes due 2034 ended level at 87 bid. The 5.4% notes due 2040 traded up ½ point to close at 83½ bid.

After weeks of negative headlines that is expected to culminate in a bankruptcy filing by the end of January., the company’s structure saw a boost after California investigators cleared the company of any blame for a 2017 wildfire.

The news could reduce its potential liabilities by $17 billion.

FirstEnergy Solutions, a subsidiary of Akron, Ohio-based utility FirstEnergy, saw its paper gain elsewhere in the utilities sector.

The 6.85% paper due 2034 gained ½ point to close at 76¼ bid. The 6.05% paper due 2021 picked up 1¼ points to close at 77 ¾ bid.

© 2015 Prospect News.
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