Chesapeake Energy notes lower after senior note swap; Teva weakens in pharma space

By James McCandless

San Antonio, Sept. 19 – As the distressed debt space experienced a more muted day, the market fell into familiar patterns.

Chesapeake Energy Corp.’s notes shifted lower after the company entered into agreements to exchange some senior notes for common stock.

Meanwhile, McDermott International, Inc.’s issues continued their free-fall after the company announced it had hired a turnaround adviser.

Modest rises in oil futures were followed by an upward move in Valaris plc’s paper while California Resources Corp.’s notes dived.

In the pharma space, Teva Pharmaceutical Industries Ltd.’s issues slipped in continuing turmoil for the sector.

Sector peer Endo International plc’s paper moved similarly.

Wireline communicator Frontier Communications Corp.’s notes dipped while Intelsat SA’s issues improved.

Dairy name Dean Foods Co.’s notes trended higher.

Chesapeake lower

Chesapeake Energy’s notes were seen shifting lower on Thursday, traders said.

The 8% senior notes due 2025 lost 1¼ points to close at 83½ bid. The 8% senior notes due 2027 shaved off ¼ point to close at 80 bid.

On Thursday, the Oklahoma City-based independent oil and gas producer said it had entered into a series of privately negotiated securities exchange agreements, under which it agreed to issue common stock in exchange for some senior notes, Prospect News reported.

The exchange agreements were executed between Sept. 13 through Sept. 18.

The company has issued or agreed to issue 68,599,009 shares of its common stock in exchange for about $145 million in three series of senior notes.

Last week, the company entered into a separate agreement to exchange $587.8 million of its senior notes and preferred shares for common stock.

McDermott falls

Meanwhile, McDermott’s issues continued in free-fall, market sources said.

The 10 5/8% senior notes due 2024 dropped 16¼ points to close at 16½ bid.

On Wednesday, the notes crashed 35¾ points.

The fall was precipitated by news that the Houston-based oil and gas engineering company had hired AlixPartners LLP as turnaround advisers, eroding the market’s confidence in the name.

In reaction, the company’s equity slid over 63%.

Moody’s Investors Services announced on Thursday that it had lowered the company’s corporate family rating, probability of default rating, senior secured credit facilities rating and senior unsecured notes rating.

All other ratings have been placed under review for downgrades.

“I’m not surprised by where the paper is at,” a trader said. “I’m more surprised about how fast it took to get there.”

Oil names diverge

On a day of modest oil futures gains, distressed energy names diverged, traders said.

A combination of a U.S. interest rate cut and continued worries of Saudi Arabia’s crude output meant a rise for futures.

West Texas Intermediate crude oil futures for October delivery inched up 2 cents to end the session at $58.13 per barrel.

North Sea Brent crude oil futures for November delivery settled at $64.40 per barrel after an 80 cent addition.

London-based contract driller Valaris’ paper moved upward.

The 5.2% senior notes due 2025 gained 1½ points to close at 64 bid. The 7¾% senior paper due 2026 garnered ¼ point to close at 66 bid.

Los Angeles-based oil and gas producer California Resources’ notes took a dive.

The 6% senior notes due 2024 declined by 7¾ points to close at 40½ bid. The 8% senior secured notes due 2022 dived 9 points to close at 50 bid.

Teva, Endo slip

In the pharma space, Teva’s issues slipped, market sources said.

The 2.2% senior notes due 2021 lost ¾ point to close at 93¼ bid. The 2.8% senior notes due 2023 declined by 1 point to close at 83½ bid.

The Petach Tikva, Israel-based generic drug producer and its sector peers continue to face myriad pressures amid a shifting landscape of legal challenges.

A number of companies face mounting litigation over opioid-related claims.

This week, industry name Purdue Pharma filed for bankruptcy as part of a blanket settlement with entities across the country.

Dublin-based drug maker Endo’s paper moved similarly.

The 6% senior paper due 2025 shed 1 point to close at 61 bid. The 6% senior paper due 2023 fell ¼ point to close at 64 bid.

Frontier dips; Intelsat up

Telecom name Frontier’s notes saw a dip, trader said.

The 10½% senior notes due 2022 moved lower by 1 point to close at 49¼ bid. The 11% senior notes due 2025 dropped 1½ points to close at 48 bid.

The Norwalk, Conn.-based wireline communications name’s structure has seen a negative streak after announcing earlier in the week that it would be making $320 million in debt payments.

The move settled market fears of a restructuring as a result of the company’s inability to make the payments.

Luxembourg-based satellite operator Intelsat’s issues headed upward.

Intelsat Jackson Holdings SA’s 5½% senior notes due 2023 picked up ¼ point to close at 93¼ bid. Intelsat (Luxembourg) SA’s 8 1/8% senior notes due 2023 added ¾ point to close at 81½ bid.

Dean Foods higher

Elsewhere, in dairy, Dean Foods’ paper trended higher, market sources said.

The 6½% senior notes due 2023 rose 1½ points to close at 51 bid.

The Dallas-based dairy products producer’s paper has seen a positive push since announcing earlier in the month that it had ended its strategic alternatives review.

The company opted out of a sale and decided to enact its new operating plan.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.