PG&E notes drop amid wildfire worries; WeWork trades higher as rescue funding detailed

By James McCandless

San Antonio, Oct. 25 – The distressed debt space capped the week with much of the trading volume focusing on newsmakers in the utilities and pharma sectors.

PG&E Corp.’s notes were seen dropping as a California wildfire spreads and the company cuts power to thousands.

Meanwhile, WeWork Cos. Inc.’s issues fared better as details of its rescue financing package from SoftBank are released.

In the pharma space, Teva Pharmaceutical Industries Ltd.’s paper saw varied movements as it tries to finalize a blanket settlement related to opioid liabilities.

Sector peer Endo International plc’s notes were moving in different directions.

Manufacturer United States Steel Corp.’s issues were lifted as the company raises the price on a segment of its products.

As oil futures increase, McDermott International, Inc.’s paper also gained as Whiting Petroleum Corp.’s notes were mixed and California Resources Corp.’s issues dipped.

Elsewhere, in chemicals, Chemours Co.’s paper continued on a positive track.

PG&E drops

PG&E’s notes were seen dropping in the Friday session, traders said.

The 6.05% notes due 2034 shed 5¾ points to close at 104½ bid. The 3.3% senior notes due 2027 fell 2¾ points to close at 96 bid.

By the end of the day, the two tranches combined to see about $138 million trading.

On Friday, the San Francisco-based bankrupt electric utility’s structure was under pressure as a wildfire spreads in California.

As the market pondered on whether the most recent wildfire is to blame on the company’s equipment, analysts said that the prospect could wipe out shareholder value and put its bankruptcy process in jeopardy.

“If they get blamed, that’s just more money they have to pay,” a trader said. “It’s a question of what they can afford.”

The utility is preparing to cut power to hundreds of thousands of customers over the weekend as weather conditions worsen.

WeWork better

Meanwhile, WeWork’s issues fared better through the day, market sources said.

The 7 7/8% senior notes due 2025 gained 1 point to close at 84¼ bid.

After news broke this week that the New York-based coworking company has accepted an $8 billion package of rescue financing from SoftBank, details of the deal emerged.

New debt will consist of $1.1 billion in senior secured notes, $2.2 billion in unsecured notes and a $1.75 billion letter-of-credit facility, Prospect News reported.

Additionally, SoftBank will be accelerating an existing commitment to fund $1.5 billion.

The funding is expected to occur after the completion of a $3 billion tender offer for all non-SoftBank shareholders at a price of $19.19 per share, expected to commence in the fourth quarter of 2019.

The deal also sees the exit of former chief executive officer Adam Neumann, who will leave the organization with up to $1.7 billion.

Teva, Endo vary

In the pharma space, Teva’s paper varied, traders said.

The 3.15% senior notes due 2026 slipped 1 point to close at 75½ bid. The 2.8% senior notes due 2023 grabbed 1 point to close at 88 bid.

Earlier in the week, the Petach Tikva, Israel-based generic drug maker announced that it had struck a tentative deal to settle all remaining legal challenges against it over opioid related claims.

The deal, which has not been finalized, would see the company donate $23 billion in medicine over 10 years and make a $250 million cash payment.

Dublin-based sector peer Endo’s notes also saw different movements.

The Par Pharmaceuticals 7½% senior secured notes due 2027 added ¼ point to close at 95½ bid. The 6% senior notes due 2023 shaved off ¼ point to close at 66 bid.

U.S. Steel lifted

Manufacturer U.S. Steel’s notes were lifted by the end of the day, market sources said.

The 6¼% senior notes due 2026 jumped up 3½ points to close at 86½ bid. The 6 7/8% senior notes due 2025 picked up 1¼ points to close at 91¼ bid.

On Friday the Pittsburgh-based steelmaker raised the price of flat-rolled products to $40 per ton.

A similar price hike by ArcelorMittal precipitated the move on Thursday by the company and others in the space.

Oil names disparate

As oil futures rose, distressed energy names saw disparate movements, traders said.

As U.S. trade officials said that a part of a preliminary trade deal with China was close to being finalized, futures saw positivity.

West Texas Intermediate crude oil futures for December delivery rose 43 cents to settle at $56.66 per barrel.

North Sea Brent crude oil futures for December delivery closed at $62.02 per barrel after a 35 cent gain.

Houston-based oil and gas engineering name McDermott’s paper followed futures upward.

The 10 5/8% senior notes due 2024 gained 1 point to close at 19½ bid.

Denver-based independent oil and gas producer Whiting Petroleum’s notes were mixed.

The 6¼% senior notes due 2023 shaved off ¼ point to close at 77 bid. The 6 5/8% senior notes due 2026 rose 2½ points to close at 69 bid.

Los Angeles-based oil and gas producer California Resources’ issues trailed.

The 6% senior notes due 2024 dipped 2½ points to close at 25½ bid. The 8% senior secured notes due 2022 slipped ¼ point to close at 43¼ bid.

Chemours positive

Elsewhere, in chemicals, Chemours’ paper continued a positive track, market sources said.

The 5 3/8% senior notes due 2027 tacked on 1¾ points to close at 91 bid.

On Thursday, the paper gained ¾ point.

The Wilmington, Del.-based chemicals producer has seen more attention this week as a lawsuit against former parent DuPont progresses.

Chemours is claiming that DuPont executives mislead it on the amount of liabilities it would be given as it was spun off in 2015.

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