McDermott notes in focus on new contract; PG&E gains continue; energy names lifted

By Abigail W. Adams

Portland, Me., July 10 – Several names in the distressed debt space were posting gains on Wednesday with crude oil futures lifting the energy sector and investors responding favorably to company news.

McDermott International, Inc.’s 10 5/8% senior notes due 2024 jumped in high-volume activity on Wednesday after the company announced it had been awarded a substantial contract.

Pacific Gas & Electric Co.’s 6.05% senior notes due 2034 continued their upward momentum on Wednesday as legislation in California establishing a wildfire fund nears adoption.

Several names in the energy space were on the rise on Wednesday as crude oil futures hit their highest level in seven weeks.

McDermott in focus

McDermott’s 10 5/8% senior notes due 2024 jumped more than 3 points on Wednesday after news broke that the engineering, procurement, construction and installation company was awarded a $1.5 billion contract.

The 10 5/8% notes traded as high as 96½ before closing the day at 96 1/8, according to a market source.

More than $36 million of the bonds were in play during Wednesday’s session, making it among the most actively traded in the space.

The notes were in focus and trading up on news the company had been awarded yet another contract, a market source said.

News broke on Wednesday that Saudi Aramco had awarded McDermott a $1.5 billion contract for the construction of an offshore gas facility and pipelines.

PG&E gains continue

Pacific Gas & Electric’s bellwether 6.05% senior notes due 2034 were again on the rise in high-volume activity on Wednesday.

The notes traded up another ¾ point to 112, a market source said. They saw more than $40 million in reported volume during Wednesday’s session.

The notes were also in focus on Tuesday and rose more than 2 points after the California State Senate passed legislation approving the creation of a $21 billion fund to help utilities facing liabilities from wildfires.

The legislation must be approved by the state assembly to go into effect.

The oil patch

Several names in the oil patch were on the rise on Wednesday as crude oil futures reached their highest level in seven weeks.

Chesapeake Energy Corp.’s junk bonds were on the rise with the capital structure gaining 1½ to 2 points.

The 8% senior notes due 2027 rose 1½ points to 85 7/8, according to a market source. More than $20 million of the bonds were in play during Wednesday’s session.

The oil and natural gas company’s 8% senior notes due 2025 were up almost 2 points to 89¾.

The 7% senior notes due 2024 were up 1½ points to 87 ¾.

Ensco Rowan plc’s 7¾% senior notes due 2026 rose 2¾ points to 77¼.

Crude oil futures reached their highest levels in seven weeks after the release of a report that showed a greater than anticipated decline in U.S. inventories.

The barrel price of WTI crude oil for August delivery rose to trade firmly on a 60 handle, a market source said.

Crude oil futures settled at 60.43, an increase of $2.60 or 4.5%.

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