PG&E better after bankruptcy court ruling; Mallinckrodt notes rise in pharma space

By James McCandless

San Antonio, Nov. 27 – The distressed debt space saw muted activity on the day before Thanksgiving with a focus on utilities and pharma names.

PG&E Corp.’s notes saw better levels after a bankruptcy court judge said he is likely to approve the company’s $11 billion insurance settlement.

Meanwhile, in pharma, Mallinckrodt plc’s issues rose as the market reacts to news of a government probe into several names.

Sector peer Endo International plc’s paper saw varied movements.

Telecom name GTT Communications, Inc.’s notes improved after Tuesday’s news that it was exploring an asset sale.

Satellite name Intelsat SA’s issues diverged.

A dip in oil futures was followed by Chesapeake Energy Corp.’s paper as Whiting Petroleum Corp.’s notes were mixed and McDermott International, Inc.’s issues were lifted.

Retailer Bed Bath & Beyond Inc.’s notes climbed on Wednesday.

PG&E better

PG&E’s notes saw better levels by the end of the day, traders said.

The 6.05% notes due 2034 improved by ¾ point to close at 106 bid.

On Tuesday, the judge in the San Francisco-based electric utility’s bankruptcy case effectively cleared the way for the company to reach a conclusion in its restructuring plan.

Judge Dennis Montali said that the company’s proposed $11 billion insurance settlement would not be a detriment to ongoing mediation between parties negotiating on a restructuring plan.

The judge said that insurers are entitled to pursue and settle claims against the name independently of wildfire victims.

The company is working to find financing to fill a $4.6 billion funding gap that would support its restructuring.

In the last few months, California governor Gavin Newsom has threatened PG&E with higher levels of oversight, including a state takeover if a compromise reorganization plan is not reached in a timely manner.

Mallinckrodt rises

Meanwhile, in pharma, Mallinckrodt’s issues rose, market sources said.

The 4¾% senior notes due 2023 rose ¾ point to close at 36 bid. The 4 7/8% senior notes due 2020 gained ¼ point to close at 69 bid.

The Staines-upon-Thames, England-based drugmaker’s structure continued to see positive trends on Wednesday despite the previous day’s news that it and five other pharmaceutical names are the subjects of a criminal probe opened by the federal government.

The investigation is to determine whether the companies knowingly contributed to the opioid epidemic by not restricting the flow of opioid medications.

The sector has weakened through much of the year as it reckons with a bevy of legal action brought by cities and states over similar complaints.

Dublin-based sector peer Endo’s paper varied.

The 6% senior notes due 2025 shaved off ¼ point to close at 62 bid. The 6% senior notes due 2023 inched up ¼ point to close at 65¾ bid.

GTT notes improve

Telecom name GTT’s notes improved, traders said.

The 7 7/8% senior notes due 2024 tacked on 1 point to close at 61¼ bid.

The McLean, Va.-based cloud networking company announced on Tuesday that it has hired Credit Suisse and Goldman Sachs as advisers to assist in a potential asset sale.

Specifically, the company is exploring the sale of its infrastructure division, which includes fiber networks and data center infrastructure.

Luxembourg-based satellite operator Intelsat’s issues were flat to higher.

Intelsat (Luxembourg) SA’s 8 1/8% senior notes due 2023 gained 2¼ points to close at 49 bid. The 9½% senior notes due 2023 held level at 59 bid.

Oil names mixed

Oil futures saw a dip as distressed energy tranches saw mixed movements, market sources said.

Futures were better after the U.S. reported a surprise build in crude inventories.

West Texas Intermediate crude oil futures for January delivery dipped 30 cents to settle at $58.11 per barrel.

North Sea Brent crude oil futures for January delivery ended at $64.06 per barrel after a 21 cent loss.

Oklahoma City-based independent oil and gas producer Chesapeake Energy’s paper followed futures downward.

The 8% senior notes due 2025 fell 4½ points to close at 49 bid. The 8% senior paper due 2027 slid 1 point to close at 49 bid.

Denver-based producer Whiting Petroleum’s notes were mixed.

The 6¼% senior notes due 2023 fell ¼ point to close at 69 bid. The 6 5/8% senior notes due 2026 improved by ¼ point to close at 58¼ bid.

Houston-based oil and gas engineering company McDermott’s issues were lifted.

The 10 5/8% senior notes due 2024 rose 1¼ points to close at 7¾ bid.

Bed Bath climbs

Retailer Bed Bath & Beyond’s long-term paper climbed, traders said.

The 5.165% senior notes due 2044 picked up 2 points to close at 71½ bid. The 4.915% senior paper due 2034 gained 3 points to close at 75½ bid.

This week, analysts at Bank of America expressed optimism in the Union, N.J.-based retail chain and Mark Tritton, its recently appointed chief executive officer.

In a note, analysts argued that the company has a higher chance of stabilizing sales through new brand and product development, tighter vendor partnerships and stronger store and online execution.

Earlier in the year, sustained pressure from activist investors for the company to execute a turnaround led to the resignation of previous CEO Steven Temares.

© 2015 Prospect News.
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