Diebold Nixdorf paper up after earnings, maturities news; PG&E lower as wildfire fund detailed

By James McCandless

San Antonio, July 25 – As the week started to wind down, the distressed space spent much of Thursday with continued attention paid to oil and utilities tranches.

Diebold Nixdorf, Inc.’s notes pushed up after the company released its second-quarter earnings report and announced a new revolving credit facility.

Meanwhile, utilities name PG&E Corp.’s issues traded lower as the company committed billions to a new wildfire insurance fund.

Telecom name Frontier Communications Corp.’s paper saw non-cohesive movement after a ratings downgrade.

In oil and gas, Superior Energy Services, Inc.’s notes skewed level-to-higher in the wake of its own earnings report.

Sector peers California Resources Corp.’s and Talen Energy Corp.’s issues followed positive oil futures as EP Energy Corp.’s paper dipped.

In pharma, Teva Pharmaceutical Industries Ltd.’s and Mallinckrodt plc’s notes were trending upward.

Diebold up

Commerce name Diebold’s notes were pushing up on Thursday, traders said.

The 8½% senior notes due 2024 picked up 5¼ points to close at 98½ bid.

On Thursday morning, the North Canton, Ohio-based connected commerce solutions name released its second-quarter earnings report.

The company reported a profit of 6 cents per share, exceeding analyst expectations of a 15 cents per share loss.

It also posted better-than-anticipated revenues of $1.15 billion.

“It looks like the last quarter was not a fluke,” a trader said. “They seem to have turned things around. They should be positive for the rest of the year. After that, it’s tough to say.”

The company’s structure had been under pressure last year after a string of low-performing quarters.

It also announced that it would extend maturities to April 2022 from December 2020 using a new revolving credit facilities and a term loan.

In reaction, Moody’s Investors Service affirmed the company’s ratings and assigned B3 ratings to the revolver and term loan.

PG&E lower

Meanwhile, in the utilities space, PG&E’s issues traded lower, market sources said.

The 4% senior notes due 2046 shaved off ½ point to close at 91¾ bid. The 6.05% notes due 2034 fell ½ point to close at 115 bid.

News broke on Thursday that the bankrupt San Francisco-based electric utility pledged to initially contribute about $4.8 billion to a newly established wildfire insurance fund.

The company would continue to contribute about $193 million annually.

The fund was signed into law recently with the expressed purpose of assisting utilities with paying out wildfire insurance claims.

The name filed for bankruptcy in January after wildfire damages mounted over two years.

In bankruptcy, it has been working through a dispute with creditors over its sole power to submit a restructuring plan.

Frontier diverges

Telecom name Frontier’s paper diverged by the close, traders said.

The 10½% senior notes due 2022 edged up ¼ point to close at 65 bid. The 11% notes due 2025 lost ¼ point to close at 60¼ bid.

On Thursday, Fitch Ratings downgraded the company’s and its subsidiaries’ issuer default ratings and issue-level ratings.

The agency cited the company’s current problem with limited options to handle its $2.7 billion in maturities in 2022 and nearly $900 million in 2023.

Paired with the company’s recent appointment of board members with restructuring expertise, the company’s paper has been pushed further into distressed territory.

Superior Energy varies

Energy name Superior Energy’s notes varied in direction, market sources said.

The 7 1/8% senior notes due 2021 rose to close at 68¼ bid. The 7¾% notes due 2024 held level at 57¼ bid.

The Houston-based oilfield services provider’s notes have seen non-cohesive movement over the last few days after the company reported its second-quarter earnings late Tuesday.

The report was highlighted by a wider-than-anticipated 29 cents per share loss and lackluster revenues of $436.32 million.

Moody’s issued a slate of downgrades as a result.

Oil rises

As oil futures saw small gains, distressed energy paper trended the same way, traders said.

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

The 6% senior notes due 2024 added ½ point to close at 53½ bid. The 8% notes due 2022 tacked on 1 point to close at 69½ bid.

Allentown, Pa.-based sector peer Talen Energy’s paper also improved.

The 10½% senior paper due 2026 jumped up 3¾ points to close at 93 bid. The 6½% paper due 2025 gained 3¾ points to close at 79½ bid.

Houston-based producer EP Energy’s notes tracked downward.

The 9 3/8% notes due 2024 fell 1 point to close at 21 bid.

West Texas Intermediate crude oil futures for September delivery added a modest 14 cents to close at $56.02 per barrel.

North Sea Brent crude oil futures for September delivery settled at $63.39 per barrel after rising 21 cents.

Teva, Mallinckrodt gain

Pharmaceutical name Teva’s issues were on an upward trend Thursday, market sources said.

The 6¾% senior notes due 2028 picked up 1¾ points to close at 89¾ bid. The 4.1% notes due 2046 rose ½ point to close at 65½ bid.

The Petah Tikva, Israel-based generic drug producer’s structure has become a bellwether for a sector under rising pressure for its role in the opioid epidemic.

“There has been a lot of short covering on Teva in the last few days,” a trader said.

Staines-Upon-Thames, England-based peer Mallinckrodt’s paper also improved.

The 5 5/8% senior paper due 2023 picked up ½ point to close at 62¾ bid.

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