PG&E bonds lower on insurance settlement news; Mallinckrodt better in pharma space

By James McCandless

San Antonio, Sept. 13 – The distressed debt space saw moderate volume to close the week, with newsmakers leading the way.

PG&E Corp.’s notes headed lower after announcing an $11 billion insurance settlement over wildfire claims.

Elsewhere, pharma name Mallinckrodt plc’s issues improved as it capped off a tumultuous week filled with restructuring talk and ratings downgrades.

Sector peer Endo International plc’s paper also rose.

In energy, Halcon Resources Corp.’s notes declined with oil futures as California Resources Corp.’s and Whiting Petroleum Corp.’s issues varied.

Wireline name Frontier Communications Corp.’s paper diverged in the telecom space as Intelsat SA moved higher.

Dairy producer Dean Foods Co.’s notes tapered off, ending a positive run.

PG&E lower

PG&E’s notes ended the week on lower footing, traders said.

The 6.05% notes due 2034 fell ¼ point to close at 110 bid.

The notes saw about $86 million changing hands by the close.

Early Friday, news broke that the San Francisco-based bankrupt electric utility had reached a settlement with insurance carriers over subrogation claims related to 2017 and 2018 wildfires.

The company committed to pay out $11 billion to insurance companies that have paid out claims to victims to recoup those payments.

The settlement has yet to be approved in bankruptcy court.

“They were at the top of the list today,” a trader said. “But it’s not over. They still have to come to an agreement with victims directly, which will not be as easy.”

Earlier this week, the company filed its reorganization plan in court, a key part being a proposed $18 billion cap on wildfire liability payments.

The utility expects to file a more detailed plan by the end of the month.

Mallinckrodt, Endo up

Elsewhere, pharma name Mallinckrodt’s notes were seen improving, market sources said.

The 5 5/8% senior notes due 2023 garnered 1¾ points to close at 37 bid. The 5¾% senior notes due 2022 added 2 points to close at 44 bid.

This week, the Staines-upon-Thames, England-based drug name announced that it would sell its contract drug manufacturing unit to a private equity firm for $250 million.

The company is considering a restructuring as it faces myriad lawsuits related to its alleged role in the opioid epidemic.

A recent settlement with two Ohio counties saw it pay out $30 million.

Also this week, S&P Global Ratings and Moody’s Investors Service both issued downgrades to the company over its increased legal risk and its restricted access to liquidity.

Dublin-based sector peer Endo’s paper also rose.

Par Pharmaceutical Cos., Inc.’s 7½% senior secured paper due 2027 picked up ½ point to close at 94½ bid. The 6% senior paper due 2025 gained ¾ point to close at 62½ bid.

Oil names vary

As oil futures declined, distressed energy names traded in varied directions, traders said.

Houston-based independent oil and gas producer Halcon Resources’ notes declined.

The 6¾% senior notes due 2025 dropped 3½ points to close at 9½ bid.

Los Angeles-based producer California Resources’ issues were flat to lower.

The 6% senior notes due 2024 shaved off ¼ point to close at 49 bid. The 8% senior notes due 2022 held level at 55 bid.

Denver-based sector peer Whiting Petroleum’s paper also saw mixed movements.

The 6¼% senior notes due 2023 gained ¼ point to close at 79¾ bid. The 6 5/8% senior notes due 2026 dipped 1 point to close at 74 bid.

West Texas Intermediate crude oil futures for October delivery lost 24 cents to end the week at $54.85 per barrel.

North Sea Brent crude oil futures for November delivery finished at $60.22 per barrel after a 16 cent loss.

Intelsat higher

In telecom, Frontier’s notes diverged during the session, market sources said.

The 10½% senior notes due 2022 edged up ¼ point to close at 55¾ bid. The 11% senior notes due 2025 lost ½ point to close at 53¼ bid.

The Norwalk, Conn.-based wireline communications name’s structure spent the week trending higher in a respite from recent negativity.

The company is considering options to deal with an upcoming maturity wall, including bankruptcy.

Luxembourg-based satellite operator Intelsat’s issues moved higher.

Intelsat Jackson Holdings SA’s 5½% senior notes due 2023 improved by ¼ point to close at 92¾ bid. Intelsat (Luxembourg) SA’s 8 1/8% senior notes due 2023 jumped up 3 points to close at 83½ bid.

Dean Foods down

Dairy name Dean Foods’ paper saw a dip, ending a positive run, traders said.

The 6½% senior notes due 2023 edged down ¼ point to close at 50 bid.

The Dallas-based dairy products producer’s paper was lifted this week after announcing last Friday that it would not be selling the company after a months-long strategic alternatives review.

The company instead plans to work through its operating plan under is new chief executive officer.

© 2015 Prospect News.
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