Diamond Offshore dives after earnings miss; Chemours down in chemicals space

By James McCandless

San Antonio, Aug. 5 – The distressed debt market, following the lead of other markets, was pushed lower on Monday on global trade concerns.

Diamond Offshore Drilling, Inc.’s notes took a dive after posting an earnings loss for the second-quarter.

Sector peer Halcon Resources Corp.’s issues improved after the company came to a restructuring agreement with unsecured creditors.

As oil futures drop, California Resources Corp. and Chesapeake Energy Corp.’s paper followed suit.

Chemicals maker Chemours Co.’s notes continued to fall in the wake of its own negative earnings report.

In the pharma space, Teva Pharmaceutical Industries Ltd.’s and Mallinckrodt plc’s issues saw varying movements.

Agriculture machine name Titan International, Inc.’s paper slid in a continuation of market scrutiny.

Steel name United States Steel Corp.’s notes saw declines as trade tensions escalate.

Diamond dives

Diamond Offshore’s notes were seen diving on Monday, traders said.

The 7 7/8% senior unsecured notes due 2025 lost 5½ points to close at 88 bid.

Early Monday, the Houston-based oil and gas driller released its second-quarter earnings report, lagging behind expectations.

The company reported a quarterly loss of 99 cents per share, wider than what analysts were expecting at an 89 cents per share loss.

Revenues were also below estimates at $216.71 million.

“It’s another indication that the offshore drilling space isn’t getting back on its feet as fast as everyone wants it to,” a trader said.

Halcon up

Elsewhere in the energy space, Halcon Resources’ issues improved, market sources said.

The 6¾% senior unsecured notes due 2025 added ¾ point to close at 19 bid.

The Houston-based independent oil and gas producer announced on Friday that it had reached a restructuring support agreement with 67.3% of current holders of its 6¾% senior unsecured notes, Prospect News reported.

The deal will be implemented through a Chapter 11 bankruptcy filing.

If implemented, the plan will result in the elimination of more than $750 million of debt and an ongoing reduction in annual interest expense of more than $40 million.

“If they already have the holders on board, it should be a pretty quick process,” a trader said. “They will probably exit bankruptcy in three to six months.”

As the company posted less and less profitable quarters over time, recent talk in the market of an impending filing has dogged the name.

Oil name off

Distressed oil tranches dropped with oil futures, traders said.

Los Angeles-based producer California Resources’ paper went negative.

The 6% senior unsecured paper due 2024 shaved off 3 points to close at 45 bid. The 8% paper due 2022 fell 3 points to close at 59 bid.

Oklahoma City, Okla.-based sector peer Chesapeake Energy’s notes also shed value.

The 8% senior unsecured notes due 2027 dropped 5½ points to close at 74¼ bid.

Oil futures, like the rest of the market, were hit with global trade worries.

West Texas Intermediate crude oil futures for Sept. delivery lost 97 cents by the end of Monday to settle at $54.69 per barrel.

North Sea Brent crude oil futures for Oct. delivery closed at $59.81 per barrel after a $2.08 drop.

Chemours falls

Meanwhile, in chemicals, Chemours’ issues continued to fall, market sources said.

The 5 3/8% senior unsecured notes due 2027 declined by 1¼ points to close at 84¼ bid.

On Friday, the 5 3/8% notes lost 3¼ points.

The Wilmington, Del.-based chemicals producer’s structure has been in decline over the last few trading days after the company reported second-quarter earnings late Thursday.

The name reported a lukewarm profit of 72 cents per share and revenues of $711 million.

Issues in the titanium dioxide market, a core segment, have weighed on the company.

Teva, Mallinckrodt diverge

Pharma name Teva’s paper saw varying movements, traders said.

The 3.15% senior unsecured paper due 2026 tacked on ½ point to close at 77½ bid. The 4.1% paper due 2046, while being pushed lower to 64½ bid during the day, ended level at 67 bid.

In recent weeks, the Petach Tikva, Israel-based generic drug maker has had to contend with a bevy of negative events, affecting the company and the industry.

Multi-million dollar settlements to quash lawsuits set off analysts’ imaginations on how high the final settlement tally could be over the next year.

“All eyes are on it and earnings are expected this week,” a trader said. “It’s not necessarily do or die, but it’s big.”

Staines-Upon-Thames, U.K.-based sector peer Mallinckrodt’s notes were also saw separate movements.

The 5½% senior unsecured notes due 2025 shed 1½ points to close at 56¼ bid. The 5¾% notes due 2022 added 3¾ points to close at 73¾ bid.

Titan slides

Equipment maker Titan’s issues saw a slide, market sources said.

The 6½% senior secured notes due 2023 traded down ¾ point to close at 80½ bid.

The Quincy, Ill.-based agricultural machinery maker’s issues have been pushed further into distressed territory after reporting a 12 cents per share loss for the second quarter last week.

Weakened demand for farm products was largely the blame.

U.S. Steel declines

U.S. Steel’s paper was in decline in the Monday session, traders said.

The 6.65% senior unsecured paper due 2037 dipped 1¼ points to close at 79¾ bid. The 6¼% paper due 2026 lost 2½ points to close at 86½ bid.

The Pittsburgh-based steel manufacturer’s paper was in decline as the market worries over increasing trade tensions, namely between the U.S. and China.

“They are one of the usual targets when it comes to trade stuff,” a trader said.

Despite surpassing earnings expectations earlier in the month at 45 cents per share, sliding profits were the focus.

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