Endo International gains after lawsuit settlement news; PG&E weakens in utilities space

By James McCandless

San Antonio, Aug. 20 – In Tuesday distressed activity, most of the market’s eyes were fixed on utilities and pharmaceutical tranches.

Endo International plc’s notes gained throughout the day after announcing a settlement with two Ohio counties over opioid claims.

Sector peer Teva Pharmaceutical Industries Ltd.’s securities were also improving.

In utilities, PG&E Corp.’s paper continued to trade under water after a bankruptcy judge ruled that suits against the company over wildfire damages could advance.

Chemicals name Chemours Co.’s notes rose despite a ratings agency downgrade.

Rayonier Advanced Materials Inc.’s issues also pushed upward.

As oil futures made small gains, California Resources Corp., Alta Mesa Resources, Inc. and Southwestern Energy Co.’s paper traded up.

Elsewhere, in telecom, Frontier Communications Corp.’s notes saw a decline.

Endo, Teva gain

Drug maker Endo’s notes were seen gaining on Tuesday, traders said.

The 6% senior notes due 2023 jumped up 5¾ points to close at 67¼ bid.

The Par Pharmaceutical Cos. Inc. 7½% senior secured notes due 2027 rose 2¼ points to close at 94½ bid.

The two tranches combined to see about $23 million on the tape by the close.

Early Tuesday, Endo International, a Dublin-based generic drug producer, announced that it had reached a settlement with two counties in Ohio over its alleged involvement in the propagation of the opioid epidemic.

The company agreed to pay a total of $10 million to Cuyahoga and Summit counties.

Endo also committed to give the counties $1 million of two of its drugs.

The settlement includes language absolving Endo and its subsidiaries of any “wrongdoing, fault or liability of any kind.”

“It’s the best-case scenario for these kinds of cases,” a trader said. “There has been significant pressure on the sector.”

Petach Tikva, Israel-based sector peer Teva’s issues were also improving.

The 2.8% senior notes due 2023 garnered 1¾ points to close at 83 bid. The 3.15% notes due 2026 picked up 1 point to close at 73¾ bid.

PG&E down

In the utilities space, PG&E’s paper continued to drop, market sources said.

The 6.05% paper due 2034 shed 1 point to close at 108½ bid. About $19 million of the notes changed hands.

On Monday, the paper dropped 1¾ points.

The market continues to drive the San Francisco-based bankrupt electric utility’s paper lower in reaction to Friday’s news that it faces increased risk from wildfire victim lawsuits.

A bankruptcy judge ruled that the suits could advance, potentially putting the name on the hook for as much as $18 billion more of liabilities.

“I think it will continue to be dragged lower,” a trader said. “It’s attractive to distressed guys now that there’s more risk.

On a positive note for the company, the judge also ruled that PG&E would retain full control of its restructuring process after rejecting petitions from two creditor groups with competing plans.

Chemours, Rayonier rise

Chemicals name Chemours’ notes were on the rise, traders said.

The 5 3/8% senior notes due 2027 added ¾ point to close at 88½ bid.

The Wilmington, Del.-based chemicals producer’s paper rose during a day of conflicting ratings changes for the name.

Before the market opened on Tuesday, an analyst at Susquehanna upgraded the company to positive from neutral.

Later in the day, S&P Global Ratings revised its outlook to negative from stable, affirming its BB rating.

The agency cited a lackluster second-quarter earnings report and a low probability of quick improvement.

Jacksonville, Fla.-based peer Rayonier’s issues also pushed upward.

The 5½% senior notes due 2024 moved up 1½ points to close at 66¾ bid.

Oil better

Oil futures saw a small rise, followed by distressed energy tranches, market sources said.

Los Angeles-based independent oil and gas producer California Resources’ paper shifted upward.

The 8% senior notes due 2022 improved by 1¼ points to close at 55¼ bid.

Houston-based producer Alta Mesa’s notes were also positive.

The 7 7/8% senior notes due 2024 rose 2½ points to close at 23 bid.

Spring, Tex.-based peer Southwestern Energy’s issues joined the trend.

The 6.2% senior notes due 2025 gained 1¼ points to close at 84 bid.

Crude oil futures saw slight gains as U.S. crude inventories were reported to be greater than analysts expected.

West Texas Intermediate crude oil futures for September delivery rose 13 cents to settle the day at $56.34 per barrel.

North Sea Brent crude oil futures for October delivery closed at $60.03 per barrel after a 29 cent gain.

Frontier declines

Elsewhere, telecom name Frontier’s paper was declining, traders said.

The 10½% senior notes due 2022 shaved off 1¾ points to close at 51½ bid. The 11% paper due 2025 lost ½ point to close at 50½ bid.

A heavy trader in the distressed telecom sector, the Norwalk, Conn.-based wireline communications name has seen its structure pushed further into distressed territory after a recent negative quarter.

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