Cloud Peak notes mixed after ratings downgrade; PG&E issues lower as court maneuvering continues

By James McCandless

San Antonio, Jan. 31 – After weeks of volume concentrated in a few sectors, the distressed space continued a more recent trend of being pulled in multiple directions.

Cloud Peak Energy Inc.’s notes were mixed after news of its hiring of restructuring advisers led to a ratings downgrade.

International peer Samarco Mineracao SA’s issues continued to shift higher after crashing on the back of negative news.

Meanwhile, PG&E Corp.’s paper declined as the company focuses on legal developments in the days after filing for bankruptcy.

Mixed activity in oil futures served as the backdrop for gains in Weatherford International plc’s notes, mixed results for California Resources Corp.’s issues and declines in Navios Maritime Acquisition Corp.’s paper.

In retail, Neiman Marcus Group, Inc.’s notes were mixed on increased attention.

Telecom company Wind Tre SPA’s issues were on the rise while Frontier Communications Corp.’s paper was mixed.

Cloud Peak mixed

Cloud Peak’s notes were mixed in the Thursday session, traders said.

The 6 3/8% notes due 2024 held level at 12½ bid. The 12% notes due 2021 lost 3 points to close at 41 bid.

On Thursday, S&P Global Ratings lowered the Gillette, Wyo.-based coal producer’s issuer credit rating and two issue-level ratings.

The notes have been under pressure as the company works through a strategic alternatives review that began in November.

On Wednesday, the company announced that it had hired Centerview Partners to assist with the review.

“The coal industry is a mess right now and they’re kind of front and center at the moment,” a trader said. “They’re going to restructure before the year is out because there’s nothing else for them.”

Samarco higher

International sector peer Samarco’s issues ended the day better, market sources said.

The 5¾% notes due 2023 added 1½ points to close at 64 bid. The 4 1/8% notes due 2022 rose 1 point to close at 60¾ bid.

The Belo Horizonte, Brazil-based mining company has been subject to market scrutiny after a dam rupture in the state of Minas Gerais led to dozens of deaths.

The disaster led the company to disclose that it was in talks with its creditors over a potential restructuring.

Those talks are now on hold.

PG&E down

Elsewhere, in the utilities space, PG&E’s paper moved lower, traders said.

The 6.05% paper due 2034 shed ½ point to close at 87½ bid. The 3.3% paper due 2027 fell ¼ point to close at 80 bid.

In the wake of filing for Chapter 11 bankruptcy, the San Francisco-based electric utility has been plunged into myriad legal proceedings.

The company is working through bankruptcy court and trying to stem the tide of cases brought by victims of recent California wildfires.

Additional negative headlines dogged the company after a U.S. district court judge accused the company of putting profits over safety in reference to the wildfires and a 2010 gas line explosion in the San Francisco area.

The company is seeking to establish a trust fund to handle all lawsuits from wildfire victims.

Oil mixed

A seesaw day for oil futures led to similar a similar lack of cohesive movement in distressed oil names, market sources said.

Baar, Switzerland-based oilfield services provider Weatherford’s notes trended positive.

The 8¼% notes due 2023 added ¼ point to close at 64½ bid. The 9 7/8% notes due 2024 picked up ½ point to close at 65½ bid.

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

The 6% notes due 2024 dropped ½ point to close at 69½ bid. The 8% notes due 2022 jumped up 2½ points to close at 82½ bid.

Monaco-based petroleum transporter Navios’ paper declined.

The 8 1/8% paper due 2021 lost ¾ point to close at 74¾ bid.

West Texas Intermediate crude oil futures for March delivery lost 44 cents on Thursday to close at $53.79 per barrel.

North Sea Brent crude futures ended the session at $61.89 per barrel after rising 24 cents.

Neiman Marcus mixed

In retail, Neiman Marcus’ notes were mixed, traders said.

The 8% notes due 2021 gained ½ point to close at 45 bid. The 7 1/8% notes due 2028 lost ¾ point to close at 79¼ bid.

On Wednesday, the 7 1/8% notes rocketed 14 points.

Earlier in the week, president and chief merchandising officer James Gold announced that he will leave the company in March.

The company is locked in litigation with creditors over a 2018 private equity transfer of e-commerce segment MyTheresa.

“There’s a lot of moving parts in this right now,” a trader said. “Every retailer in this position does not want to be the next Sears. So sometimes we’ll see movements like this.”

Telecom rises

Distressed telecom names were moving upward, market sources said.

Rome-based mobile and fixed telecommunications name Wind Tre’s issues were better.

The 5% notes due 2026 rose ¾ point to close at 83¼ bid.

Norwalk, Conn.-based wireline telecom name Frontier’s paper was also gaining.

The 7 5/8% paper due 2024 dropped 1¾ points to close at 52½ bid. The 10½% paper due 2022 gained ¼ point to close at 71½ bid. The 11% paper due 2025 saw a boost of 3¼ points to close at 67¾ bid.

© 2015 Prospect News.
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