PG&E lower as company enters debt commitments; Whiting down after acquisition news

By James McCandless

San Antonio, Oct. 15 – The distressed debt space saw newsmakers under pressure at the beginning of a short week in bond trading.

PG&E Corp.’s notes moved lower after the company announced that it had entered into $34.46 billion in debt commitments.

In oil and gas, Whiting Petroleum Corp.’s issues declined after news broke that the company is in talks to acquire another producer.

As crude futures fell, McDermott International, Inc.’s paper also trailed as Chesapeake Energy Corp.’s and Valaris plc’s notes pushed up.

Drug store chain Rite Aid Corp.’s issues were lifted after the company announced cash tender offers for two series of notes.

Sector peer Bed Bath & Beyond Inc.’s paper also rose after receiving an upgrade from an analyst.

Manufacturer United States Steel Corp.’s notes dipped amid a proposed convertible note offering.

Pharma name Teva Pharmaceutical Industries Ltd.’s issues saw varying activity.

PG&E lower

PG&E’s notes moved lower in Tuesday’s session, traders said.

The 6.05% notes due 2034 lost 1¼ points to close at 112¾ bid.

On Tuesday, the San Francisco-based bankrupt electric utility announced that it has entered into debt commitment letters under which the commitment parties agreed to provide $34.46 billion in bridge financing, Prospect News reported.

Not planning on entering the facilities, the company said it intends to obtain permanent financing on or before emerging from bankruptcy in the form of bank facilities, debt securities or a combination of those.

After weeks of deliberation, a bankruptcy court judge recently stripped PG&E of its exclusive right to submit a restructuring plan.

A committee of wildfire victims, creditors and other stakeholders lobbied for the move, arguing that allowing for competing plans would result in the best outcome.

The company is also catching heat from its recent decision to cut power to hundreds of thousands of customers in California as a wildfire prevention measure.

Whiting declines

In the oil and gas space, Whiting’s issues declined, market sources said.

The 6¼% senior notes due 2023 fell 1 point to close at 77 bid. The 6 5/8% senior notes due 2026 shaved off ½ point to close at 66¾ bid.

News broke on Tuesday morning that the Denver-based independent oil and gas producer is in talks to buy San Antonio-based sector peer Abraxis Petroleum.

Terms of the deal have not been disclosed.

Also on Tuesday, the company received an analyst downgrade from Wolfe Research, citing its ongoing problems with generating free cash flow.

Oil names diverge

Meanwhile, as oil futures fell, distressed energy names diverged, traders said.

Futures saw a fall after a forecast from the International Monetary Fund pegged global economic growth as slowing by 3%.

West Texas Intermediate crude oil futures for November delivery slid 78 cents to settle the day at $52.81 per barrel.

North Sea Brent crude oil futures for December delivery finished at $58.74 per barrel after a 61 cent loss.

Houston-based oil and gas engineering name McDermott’s paper saw a downturn.

The 10 5/8% senior notes declined by ¼ point to close at 24 bid.

On the other side of the spectrum, Oklahoma City-based oil and gas producer Chesapeake Energy’s notes improved.

The 8% senior notes due 2025 tacked on 1 point to close at 68¾ bid. The 8% senior notes due 2027 added ¼ point to close at 65¾ bid.

London-based contract driller Valaris’ issues pushed higher.

The 7¾% senior notes due 2026 gained 1 point to close at 57½ bid. The 5.2% senior notes due 2025 rose ½ point to close at 55 bid.

Rite Aid lifted

Retail name Rite Aid’s paper saw a boost in trading, market sources said.

The 7.7% senior notes due 2027 jumped up 7½ points to close at 60½ bid. The 6 7/8% senior paper due 2028 shot up 12 points to close at 63 bid.

The Camp Hill, Pa.-based drug store chain said that it has begun cash tender offers to purchase up to $100 million of its outstanding $270,461,000 2027 senior notes and $68,442,000 2028 senior notes, Prospect News reported.

The company is offering a total consideration of $610 for each $1,000 principal amount of notes tendered by 5 p.m. ET on Oct. 28, the early tender date.

Bed Bath rises

Sector peer Bed Bath’s longer-term notes were on the rise, traders said.

The 5.165% senior notes due 2044 added 3½ points to close at 76 bid. The 4.915% senior notes due 2038 gained 1 point to close at 77 bid.

The Union, N.J.-based retailer’s structure turned positive after an analyst at KeyBanc upgraded the company’s common stock.

The move comes after the company appointed Mark Tritton as its new chief executive officer after a months-long search.

Previous CEO Steven Temares resigned under pressure from an activist investor campaign to turnaround performance.

U.S. Steel dips

U.S. Steel’s issues were seen dipping by the end of the day, market sources said.

The 6 7/8% senior notes due 2025 lost 1¼ points to close at 87 bid. The 6¼% senior notes due 2026 dropped 2½ points to close at 81 bid.

The Pittsburgh-based steel manufacturer announced plans to price $300 million of seven-year convertibles after the market close on Wednesday with a coupon of 4% to 4.5% and an initial conversion premium of 27.5% to 32.5%, Prospect News reported.

The company recently released preliminary results for its third-quarter earnings, saying it expects to report a narrower-than-expected loss per share of between 20 and 26 cents.

More scrutiny has been placed on the name after it announced a $700 million acquisition of a 49.9% stake in Big River steel, with the option to purchase the rest within four years.

Teva varies

Pharma name Teva’s paper moved in varying directions, traders said.

The 2.2% senior notes due 2021 added ¾ point to close at 93¼ bid. The 3.15% senior notes due 2026 shaved off ½ point to close at 71¾ bid.

The Petach Tikva, Israel-based generic drug producer and others continue to see negativity as the industry faces mounting litigation from states and cities over opioid-related claims.

Many companies are seeking ways to come to a blanket settlement over the claims, modeled after peer Purdue Pharma’s recent settlement.

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