Weatherford notes rise despite earnings miss; PG&E issues lower as company wins access to financing

By James McCandless

San Antonio, Feb. 1 – The end of the week in the distressed space ended with a net gain across the spectrum.

Weatherford International plc’s notes rose despite missing earnings estimates as the market saw good news in the company’s cash flows.

Elsewhere in oil and gas, another mixed session for oil futures saw similar results in California Resources Corp. and Ensco plc’s issues while Sanchez Energy Corp.’s paper improved.

In the utilities space, PG&E Corp.’s notes were lower as the company secured access for $1.5 billion in DIP financing.

Samarco Mineracao SA’s issues extended a positive streak after a crash earlier in the week.

Telecom name Intelsat SA’s paper was trending higher while domestic peer Frontier Communications Corp.’s notes were mixed.

Hexion Inc.’s issues were also mixed.

Weatherford up

Leading in the energy space, Weatherford’s notes rose, traders said.

The 9 7/8% notes due 2024 grabbed 4 points to close at 69½ bid. The 8¼% notes due 2023 added 3½ points to close at 68 bid.

On Friday morning, the Baar, Switzerland-based oilfield services provider released its fourth-quarter earnings report.

The company posted a 14 cents per share loss versus analyst expectations of a 12 cents per share loss.

It also reported lackluster revenues of $1.43 billion.

Despite the negativity in the topline, the market found a silver lining in the company’s free cash flow of $105 million and better-than-expected EBITDA.

“It was a surprise for everyone,” a trader said. “The executives are grabbing onto this and talking about being able to turn the company around and they could be right. It could be a flash in the pan, but that’s something we’ll learn down the road.”

After the Friday close, the company announced that it had completed an exchange offer for $600 million outstanding of its 9 7/8% senior notes due 2025 for similarly termed notes.

The exchange offer expired at 5 p.m. on Jan. 28.

Oil names mixed

Another mixed session for oil futures led to like-minded trading for distressed oil names, market sources said.

Los Angeles-based independent oil and gas producer California Resources, considered a bellwether of the space, saw its issues trade mixed.

The 6% notes due 2024 gained ½ point to close at 70 bid. The 8% notes due 2022 shed 1½ points to close at 81 bid.

London-based contract driller Ensco’s paper took a similar route.

The 7¾% paper due 2026 picked up 2½ points to close at 83¼ bid. The 7.2% paper due 2027 shaved off ¼ point to close at 78¾ bid.

Houston-based sector peer Sanchez Energy’s notes improved.

The 6 1/8% notes due 2023 gained 1½ points to close at 19 bid.

At the end of the week, West Texas Intermediate crude oil futures for March delivery closed the trading day at $55.26 per barrel after rising $1.47.

North Sea Brent crude oil futures lost 2 cents, closing at $61.87.

PG&E lower

Elsewhere, PG&E’s issues were lower Friday, traders said.

The 6.05% notes due 2034 lost ¼ point to close at 87¼ bid.

Late Thursday, the San Francisco-based bankrupt electric utility received approval to access $1.5 billion of a proposed $5.5 billion of debtor-in-possession financing on an interim basis in U.S. bankruptcy court, Prospect News reported.

The final hearing for full access is scheduled for Feb. 27.

The company filed for Chapter 11 bankruptcy this week after warning stakeholders of the possibility of a large accounting charge in liabilities after recent California wildfires.

Samarco positive

Mining name Samarco’s paper continued a slow march upward, market sources said.

The 4 1/8% paper due 2022 picked up 1¼ points to close at 62 bid. The 5¾% paper due 2023 pushed up ½ point to close at 64½ bid.

The Belo Horizonte, Brazil-based mining company’s structure has been making modest improvements following Monday’s crash in reaction to negative headlines.

The collapse of a dam that it co-owns in the state of Minas Gerais led the company to reveal that it was in the middle of advanced restructuring talks with bondholders.

Those talks are now on pause.

Telecom trends up

In the telecom space, Luxembourg-based satellite operator Intelsat’s notes were pushed higher, traders said.

Intelsat Jackson Holdings SA’s 5½% notes due 2023 rose ¼ point to close at 91½ bid. Intelsat (Luxembourg) SA’s 8 1/8% notes due 2020 gained 1 point to close at 85 bid.

On the domestic side, wireline telecom name Frontier’s issues were mixed.

The 7 5/8% notes due 2024 picked up 2½ points to close at 55 bid. The 10½% notes due 2022 edged up ¼ point to close at 71¾ bid. The 11% notes due 2025 dropped 3 point to close at 64¾ bid.

Hexion mixed

Hexion’s paper was mixed, market sources said.

The 6 5/8% paper due 2020, while pushing as high as 80¾ bid during the day, ended flat at 80¼ bid, according to Trace data. The 9% paper due 2020 fell ¼ point to close at 45 bid.

The Columbus, Ohio-based chemicals producer’s notes have been under pressure since news broke in 2018 that second-lien holders were organizing in response to concerns of recouping value when $2.4 billion in paper matures in 2020.

“They’ve been leaking lower, but they’re sort of in a holding pattern,” a trader said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.