Intelsat bonds trade better in telecom space; Chesapeake active amid investor rift

By James McCandless

San Antonio, Dec. 5 – Traders in the distressed debt market saw the focus shift to names in the telecom and energy sectors.

Intelsat SA’s notes moved to better levels as the government works to decide how to handle a public auction of C-band spectrum.

Sector peer GTT Communications, Inc.’s issues declined.

In oil and gas, Chesapeake Energy Corp.’s paper varied as investors express concerns about the company’s five-series exchange offer.

Oil futures saw mixed movements, garnering similar reactions from California Resources Corp.’s notes as Valaris plc’s and Whiting Petroleum Corp.’s issues gained.

Shipping name Navios Maritime Holdings Inc.’s notes rose following a ratings downgrade.

Elsewhere, in pharma, Mallinckrodt plc’s notes improved after announcing the results of a recent tender offer.

Electric utility PG&E Corp.’s issues weakened by the close.

Intelsat better, GTT off

Intelsat’s notes moved to better levels, traders said.

Intelsat (Luxembourg) SA’s 8 1/8% senior notes due 2023 rose 1½ points to close at 46 bid. The 9½% senior notes due 2023 added ¼ point to close at 56¼ bid.

The two tranches combined to see about $52 million trading.

The Luxembourg-based satellite operator’s structure saw heightened attention as the U.S. government works out how to handle a public auction for C-band spectrum.

The Senate is considering a number of bills that would offer direction to the Federal Communications Commission on how to handle the auction.

One bill being considered in the Commerce Committee would require 50% of the auction proceeds going toward the Treasury and mandates the auction to start no later than Dec. 31, 2020.

Also this week, news broke that investment company Appaloosa closed its position in the name.

McLean, Va.-based cloud networking name GTT’s issues declined.

The 7 7/8% senior notes due 2024 lost ½ point to close at 69½ bid.

Chesapeake varies

Meanwhile, in oil and gas, Chesapeake Energy’s paper varied, market sources said.

The 7% senior notes due 2024 shed 3½ points to close at 46½ bid. The 8% senior notes due 2027 picked up 1½ points to close at 58¾ bid.

About $36 million of the paper traded.

On Thursday, some investors expressed concerns about the Oklahoma City-based independent oil and gas producer’s recently started $1.5 billion five-series exchange offers.

The prioritization of the notes has some holders worried about a potential oversubcription.

“The 7% paper is last in the pecking order and that has some people worried that it would be left behind if it’s oversubscribed,” a trader said.

The exchange is part of the company’s plan to tackle its $10 billion debt load.

The company also launched a tender offer on behalf of subsidiaries to purchase for cash any and all of the $617.81 million 6 7/8% senior notes due 2025.

Oil mixed

Oil names were mixed with a positive bent, traders said.

Futures were non-cohesive in movement as the market anticipated word from OPEC on a potential supply cut.

West Texas Intermediate crude oil futures for January delivery went unchanged at $58.43 per barrel.

North Sea Brent crude oil futures for February delivery added 39 cents to close at $63.39 per barrel.

Los Angeles-based producer California Resources’ notes also saw mixed movements.

The 6% senior notes due 2024 held level at 24 bid. The 8% senior notes due 2022 improved by ¼ point to close at 30¼ bid.

London-based contract driller Valaris’ issues gained.

The 5.2% senior notes due 2025 added ¼ point to close at 48¼ bid. The 7¾% senior notes due 2026 gained ¼ point to close at 46¾ bid.

Denver-based peer Whiting Petroleum’s paper took a higher path.

The 6¼% senior paper due 2023 pushed up 1 point to close at 68 bid. The 6 5/8% senior notes due 2026 rose ½ point to close at 58 bid.

Navios rises

In shipping, Navios’ notes saw a rise by the end of the session, market sources said.

The 7 3/8% secured notes due 2022 improved by 1 point to close at 58½ bid. The 8 1/8% secured notes due 2021 gained 1 point to close at 78¾ bid.

S&P Global Ratings issued downgrades for the Monaco-based shipping name during the Thursday session.

The agency lowered the company’s corporate family rating and two issue-level ratings, citing its pattern of discounted debt buybacks.

S&P said that if the level of buybacks does not die down, the potential for a distressed exchange increases.

In September, the company purchased more than $80 million of its 7 3/8% first-priority ship mortgage notes due 2022.

Mallinckrodt up

Elsewhere, in pharma, Mallinckrodt’s issues improved, traders said.

The 4¾% senior notes due 2023 shot up 5½ points to close at 38¼ bid. The 5½% senior notes due 2025 pushed up 2¼ points to close at 32¼ bid.

On Thursday morning, wholly owned subsidiaries Mallinckrodt International Finance SA and Mallinckrodt CB announced the final results of their private offers to exchange several series of their notes for new notes, Prospect News reported.

About $706.1 million was tendered across five series of notes.

PG&E weaker

Utilities name PG&E’s paper was weakened, market sources said.

The 6.05% notes due 2034 shaved off ¼ point to close at 104¾ bid.

The San Francisco-based bankrupt electric utility saw higher levels of trading over the last few days after news broke on Wednesday that the company is close to closing on a $13.5 billion payout for wildfire victims.

If agreed to, the deal would be half cash and half common stock.

The company is under pressure to move forward with a restructuring agreement, facing increasing pressure from California officials to move quickly or face increased regulations.

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