Intelsat notes lower in telecom space; Mallinckrodt active after early tender results

By James McCandless

San Antonio, Nov. 20 – The distressed debt space continued to focus on newsmakers in the telecom and energy sectors on Wednesday.

Intelsat SA’s notes dominated trading again, moving lower in the wake of adverse actions from the Federal Communications Commission.

Sector peer Frontier Communications Corp.’s issues were also under pressure.

Elsewhere, in pharma, Mallinckrodt plc’s paper varied after the company released early tender results for several series of notes.

Business software name Exela Technologies, Inc.’s notes rose despite a late Tuesday ratings downgrade of a subsidiary.

Utilities name PG&E Corp.’s issues improved, snapping a four-day negative streak as the company works toward a restructuring plan.

Meanwhile, in energy, California Resources Corp.’s paper saw a slight recovery after California stopped new fracking approvals.

Oil and gas names Chesapeake Energy Corp.’s and Whiting Petroleum Corp.’s notes dipped with oil futures as Valaris plc’s issues diverged.

Intelsat, Frontier lower

Intelsat’s notes moved lower at the top of distressed activity on Wednesday, traders said.

The 9½% senior notes due 2023 fell 2¾ points to close at 64½ bid. Intelsat Jackson Holdings SA’s 8½% senior notes due 2024 declined by 2¼ points to close at 83¾ bid.

About $179 million of the two notes traded.

After days of declines for the Luxembourg-based satellite operator’s notes and equity, an analyst at Raymond James said that the equity had reached a floor, issuing an upgrade.

“It’s still the topical name in distressed, but the volume was relatively muted today,” a trader said.

The company has seen intense scrutiny this week after the FCC chairman Ajit Pai came out in favor of a public auction for C-band spectrum, opposing Intelsat and its cohorts’ proposed plan to hold a private auction and repay the U.S. government a portion of the proceeds.

Norwalk, Conn.-based wireline communications name Frontier’s issues were also under pressure.

The 10½% senior notes due 2022 shaved off ½ point to close at 43¾ bid. The 11% senior notes due 2025 shed ¾ point to close at 43¼ bid.

Mallinckrodt active

Elsewhere, in the pharma space, Mallinckrodt’s paper varied, market sources said.

The 5¾% senior paper due 2022 picked up ½ point to close at 26 bid. The 4 7/8% senior paper due 2020 dipped ¼ point to close at 66¾ bid.

After the close on Tuesday, the Staines-upon-Thames, England-based drug producer’s wholly owned subsidiaries Mallinckrodt International Finance SA and Mallinckrodt CB announced the early results of their private offers to exchange several series of their notes for new notes.

The offerings are for five series of notes, so far totaling about $692.8 million.

The offer is set to expire at 11:59 p.m. ET on Dec. 4 with settlement following on Dec. 6.

Exela rises

Software name Exela’s notes spent the day on the rise, traders said.

The 10% senior secured notes due 2023 added 1¾ points to close at 33¼ bid.

Late Tuesday, Moody’s Investors Service issued downgrades for subsidiary Exela Intermediate LLC, cutting its corporate family rating, probability of default rating, issue-level ratings and speculative grade liquidity ratings.

The agency cited the Irving, Tex.-based business software developer’s poor operating performance, competitive pressures and expected weak liquidity for the next 12 to 18 months.

PG&E up

Utilities name PG&E’s issues improved, market sources said.

The 6.05% notes due 2034 improved by ½ point to close at 101½ bid.

The San Francisco-based bankrupt electric utility’s issues snapped a four-day negative streak as it works toward finalizing a settlement with California state regulators over allegedly failing to maintain equipment that started wildfires in 2017.

The company may pay out $1.7 billion.

The utility is also seeking $4.6 billion in funding to close a gap in supporting its restructuring plan.

California governor Gavin Newsom is pushing for the company to finalize a restructuring plan or face the potential of a state takeover.

California Resources better

Meanwhile, in energy, California Resources’ paper saw a small recovery, traders said.

The 6% senior notes due 2024 picked up 1 point to close at 20 bid. The 8% senior paper due 2022 garnered ½ point to close at 29 bid.

The Los Angeles-based independent oil and gas producer saw pressure on Tuesday after governor Newsom announced that the state would halt new fracking permits until regulators complete an investigation into the safety of it and similar extraction practices.

The development is in reaction to a recent leak from a Chevron facility.

Energy notes head lower

As oil futures rose, distressed energy names trended lower, market sources said.

Futures improved after news broke of a narrower-than-expected build up in U.S. crude inventories.

West Texas Intermediate crude oil futures for December delivery improved by $1.90, settling at $57.11 per barrel.

North Sea Brent crude oil futures for January delivery finished at $62.40 per barrel after a $1.49 jump.

Oklahoma City-based producer Chesapeake Energy’s notes dipped.

The 8% senior notes due 2025 fell 1¾ points to close at 57¼ bid. The 8% senior notes due 2027 shed 1¾ points to close at 53¼ bid.

Denver-based sector peer Whiting Petroleum’s issues also saw negativity.

The 6¼% senior notes due 2023 lopped off 2½ points to close at 68½ bid. The 6 5/8% senior notes due 2026 lost 1¼ points to close at 57½ bid.

London-based contract driller Valaris’ paper diverged.

The 5.2% senior notes due 2025 added 1¾ points to close at 45¾ bid. The 7¾% senior paper due 2026 dipped 1¾ points to close at 45¼ bid.

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