McDermott International notes decline in energy space; PG&E higher amid creditor spat

By James McCandless

San Antonio, Sept. 24 – The distressed debt market saw more focus on energy tranches, echoing the previous day’s activity.

McDermott International, Inc.’s notes were declining at the top of the energy space, with the company still reeling from last week’s crash.

Sector peer Extraction Oil & Gas, Inc.’s issues saw negativity after a ratings agency changed its view of the name for the worse.

A slip in oil futures was followed by moves downward for California Resources Corp.’s and Valaris plc’s paper.

Elsewhere, PG&E Corp.’s notes moved higher amid an increasingly contentious reorganization dispute with its creditors.

Pharma name Mallinckrodt plc’s and Teva Pharmaceutical Industries Ltd.’s issues varied.

In telecom, Frontier Communications Corp. and Intelsat SA’s paper diverged.

McDermott declines

McDermott’s notes were declining in the energy space, traders said.

The 10 5/8% senior notes due 2024 lost 1 point to close at 27 bid.

About $59 million of the notes changed hands by the close.

The Houston-based oil and gas engineering name’s structure has seen a precipitous fall in recent trading days after announcing that it had hired turnaround advisers to revamp its balance sheet.

After falling from the 70’s context into the teens, the notes were lifted again after news broke that the name was considering selling a technology unit for $2.5 billion.

The developments have spurred bondholders to organize, hiring advisers to protect their interests.

The company received ratings downgrades from S&P Global Ratings on Monday.

Extraction Oil lower

Sector peer Extraction Oil & Gas’ issues also moved negatively, market sources said.

The 5 5/8% senior notes due 2026 shed 1 point to close at 67¼ bid. The 7 3/8% senior notes due 2024 fell 2 points to close at 71 bid.

On Tuesday, S&P revised its view of the Denver-based independent oil and gas producer.

The agency changed its outlook to negative from stable, citing the possibility of ratings downgrades if operational issues persist.

Oil futures slip

As oil futures dipped, distressed energy tranches followed, traders said.

Futures were lower as markets continue to see progress in Saudi Arabia’s production capacity following an attack on its production capabilities.

West Texas Intermediate crude oil futures for November delivery gave back $1.35 to settle the day at $57.29 per barrel.

North Sea Brent crude oil futures for November delivery finished at $63.10 after a $1.67 decline.

Los Angeles-based producer California Resources’ paper trailed.

The 6% senior notes due 2024 dived 5½ points to close at 35 bid. The 8% senior secured paper due 2022 was 2¼ points weaker to close at 55 bid.

London-based contract driller Volaris’ notes followed the sector’s trend.

The 5.2% senior notes due 2025 slid 1¼ points to close at 61¼ bid. The 7¾% senior notes due 2026 lost 1¼ points to close at 61¾ bid.

PG&E higher

Elsewhere, PG&E’s issues were seen moving higher, market sources said.

The 6.05% notes due 2034 garnered ¾ point to close at 112½ bid.

About $25 million was on the tape by the close.

The San Francisco-based bankrupt electric utility is embroiled in a dispute with its creditors and wildfire victims over two proposed restructuring plans.

While the company continues to retain the sole right to submit a plan in bankruptcy court, it has already formalized an $11 million insurance subrogation settlement and hopes to cap victim payouts at $8.4 billion.

Late last week, the creditor group submitted its own plan, calling for the judge to waive PG&E’s exclusivity.

In the creditors’ plan, the company would pay out $24 billion.

“This will take about a month to play out, but everyone is jockeying for position right now,” a trader said.

Mallinckrodt, Teva eyed

Pharma name Mallinckrodt’s paper moved in different directions, traders said.

The 5 5/8% senior notes due 2025 inched up ¼ point to close at 37 bid. The 4 7/8% senior notes due 2020 declined by 2 points to close at 73 bid.

The Staines-upon-Thames, England-based drug maker’s structure continues to see turmoil as lawsuits over the opioid epidemic hang on the horizon across the nation.

As the company experiences liquidity issues, it has taken to drawing down the remainder of its credit facility and selling off a $250 million division in recent weeks.

Petach Tikva, Israel-based peer Teva’s notes also saw mixed movements.

The 2.8% senior notes due 2023 tacked on ¼ point to close at 82¾ bid. The 2.2% senior notes due 2028 dropped ½ point to close at 92½ bid.

Frontier, Intelsat active

In telecom, Frontier’s issues diverged in trading, market sources said.

The 10½% senior notes due 2022 gained ¼ point to close at 48 bid. The 11% senior notes due 2025 dipped 1 point to close at 46½ bid.

The market awaits the release of a restructuring plan from the Norwalk, Conn.-based wireline communications name, which it reportedly told creditors last week to expect in the immediate future.

Luxembourg-based satellite operator Intelsat’s paper saw similar behavior.

Intelsat Jackson Holdings SA’s 5½% senior notes due 2023 added ¼ point to close at 93¼ bid. Intelsat (Luxembourg) SA’s 8 1/8% senior notes due 2023 shaved off ½ point to close at 81½ bid.

© 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.