Dean Foods notes lose after ratings downgrade; PG&E issues higher as court mulls oversight requirements

By James McCandless

San Antonio, March 6 – The distressed space closed Wednesday on a net negative as volume was scaled down.

Dean Foods Co.’s notes were losing after receiving a ratings downgrade on Wednesday.

Elsewhere, PG&E Corp.’s issues were higher as a federal judge considers changes to the company’s oversight requirements.

In the medical space, both Endo International plc’s and Mallinckrodt plc’s notes were moving lower on increased attention.

Intelsat SA’s notes were heavily traded but level as doubts mount over the U.S. government’s attitude to C-band.

Meanwhile, sector peer Digicel Group Ltd.’s issues continued to gain amid the backdrop of a new note offering.

Shipping name Navios Maritime Holdings Inc.’s paper traded higher.

In energy, California Resources Corp. notes were mixed while Sanchez Energy Corp.’s issues bounced up.

Dean Foods loses

Dean Foods’ notes were on the losing side of trading on Wednesday, traders said.

The 6½% notes due 2023 dropped 1½ points to close at 67½ bid.

On Wednesday S&P Global Ratings downgraded the Dallas-based dairy product manufacturer’s issuer credit rating and senior unsecured debt rating.

It also affirmed a negative outlook.

The move was triggered by the company’s recent announcement that as a result of lagging sales, it would conduct a strategic alternatives review that includes the potential sale of the company.

“They keep getting killed,” a trader said. “As it’s been said by everyone else, there’s not a lot of options for this place to land.”

PG&E up

Elsewhere, PG&E’s issues closed the session higher, market sources said.

The 6.05% notes due 2034, considered a bellwether for the structure, added ¼ point to close at 93¾ bid.

The San Francisco-based bankrupt electric utility’s issues were active amid shifting winds concerning wildfire prevention measures.

News broke Wednesday that a federal judge overseeing a criminal case against the company criticized the company’s current efforts in wildfire prevention while at the same time scaling back other potential requirements.

An earlier plan would see the bankrupt name conduct an inspection and make repairs to its power grid before wildfire season.

As it stands, the company would only be mandated to clear trees and other debris around power lines in order to comply with California state law.

Endo, Mallinckrodt down

Meanwhile, in the pharmaceutical sector, Endo’s paper was in decline, traders said.

The 6% paper due 2023 lost 1¼ points to close at 78¾ bid. The 5 3/8% paper due 2023 fell 2 points to close at 80 bid.

While the Dublin-based pharmaceutical name saw increased activity on Wednesday, catalysts were unclear.

“This one’s kinda weird,” a trader said. “It’s been riding a high recently with better earnings and scaling back its presence in the opioid space. They even scored some points against the FDA recently. So maybe it was due for a correction.”

Staines-Upon-Thames-based sector peer Mallinckrodt’s notes were also on a negative path.

The 4¾% notes due 2023 declined by ¾ point to close at 82 bid.

Intelsat firm

Telecom name Intelsat’s issues were trending higher but closed level, market sources said.

Intelsat (Luxembourg) SA’s 8 1/8% notes due 2023, pushing as high as 80½ bid during the day, ended level at 77 bid. Intelsat Jackson Holdings SA’s 5½% notes due 2023, while reaching 90¼ bid in Wednesday trading, fell back to 90 bid, according to Trace data.

The Luxembourg-based satellite operator’s structure has come under pressure this week on a string of headlines concerning the U.S. government’s shifting mood on the C-band spectrum, which Intelsat operates.

News broke Tuesday that U.S. lawmakers are wary of a proposal that would see the Luxembourg-based satellite operator and others to sell access to the C-band network to mobile phone network operators, creating a new revenue stream for Intelsat.

Digicel adds

Sector peer Digicel’s paper were positive, traders said.

The 6% paper due 2021 rose 2¼ points to close at 85 bid.

The Kingston, Jamaica-based mobile phone network provider’s structure continues to rise in the background as it plans a Thursday pricing of $550 million of five-year first-lien senior secured notes.

Navios improves

In the shipping space, Navios’ notes were improving, market sources said.

The 7 3/8% notes due 2022 tacked on 1½ points to close at 49½ bid.

The Monaco-based shipping company continues trading amid a preferred stock exchange offer and an overall negative atmosphere in its sector.

“People are waiting for the trade climate to improve,” a trader said. “That’s what’s putting the squeeze on shipping companies, and there continues to be a lot of uncertainty surrounding that.”

Oil mixed

Popular distressed energy tranches were mixed, following oil futures, traders said.

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

The 6% notes due 2024 rose 2 points to close at 70½ bid. The 8% notes due 2022 were negative by 3¾ points to close at 75 bid.

Houston-based sector peer Sanchez Energy’s paper bounced up.

The 6 1/8% paper due 2023 gained 2¾ points to close at 14¾ bid.

West Texas Intermediate crude oil futures for April delivery closed 34 cents lower, ending the session at $56.22 per barrel.

North Sea Brent crude futures for May delivery closed at $65.99 per barrel after a 13 cent rise.

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