PG&E rises after restructure plan stalled; Envision spikes amid regulatory delay

By James McCandless

San Antonio, Dec. 16 – The distressed debt space began the week on a positive run, focusing on shifting ground in the utilities and health care spaces.

PG&E Corp.’s notes rose after the governor of California rejected the company’s reorganization plan, citing a need to establish a better financing plan.

Health care name Envision Healthcare Corp.’s issues spiked as federal regulators are expected to delay surprise billing reform.

Meanwhile, in oil and gas, Transocean Ltd.’s paper improved following its awarding of a drilling contract.

Gaining oil futures were followed by California Resources Corp.’s, Valaris plc’s and Whiting Petroleum Corp.’s notes.

In the telecom space, Intelsat SA’s issues trended upward while Frontier Communications Corp.’s paper varied.

ATM maker Diebold Nixdorf, Inc.’s notes were active but flat.

PG&E rises

PG&E’s notes were on the rise as the session ended, traders said.

The 6.05% notes due 2034 rose ½ point to close at 106¾ bid.

Late Friday, Governor Gavin Newsom of California rejected the San Francisco-based bankrupt electric utility’s restructuring proposal, saying that the plan falls short of state requirements.

Newsom laid out that the company would have to appoint a new board of directors, require a better financing package and include a provision for a state takeover if it fails to meet safety standards.

PG&E has until Tuesday to resubmit its plan.

The development is a boon for Elliott Management and Pimco, who both have criticized the company’s plan and have put forward their own.

“I think they put forward a new plan and that ends up being the plan that they go with,” a trader said. “Elliott will continue to push for their plan but it won’t go anywhere.”

Recently, the company reached a $13.5 billion settlement for wildfire victims and some limited public entities and $11 billion for insurance subrogation claims.

Envision spikes

Health care name Envision’s issues jumped higher, market sources said.

The 8¾% senior notes due 2026 spiked 7¾ points to close at 65 bid.

The Nashville-based hospital name’s structure saw higher levels of trading after news broke that legislation meant to protect patients from surprise medical bills is likely to be stalled until 2020.

Up until Monday, analysts had expected a bill curbing the practice to be included in a year-end funding package.

Expectations changed after lawmakers acknowledged that differences in bills from the Senate and the House could not be reconciled in time, pushing its passage until next year.

Transocean up

Meanwhile, in oil and gas, Transocean’s long-term paper improved, traders said.

The 6.8% senior notes due 2038 garnered 3¾ points to close at 71 bid. The 9.35% senior notes due 2041 added 3¾ points to close at 81¼ bid.

The Steinhausen, Switzerland-based offshore contract driller announced on Monday that it had been awarded a $91 million one-year contract for the use of a semisubmersible development driller off the coast of Trinidad and Tobago.

In its most recent earnings report, the company reported a quarterly loss of 38 cents per share, slightly better than the 40 cents per share loss that was expected.

The day rate is estimated to be $250,000.

Oil gains

Gaining oil futures were followed by distressed energy tranches, market sources said.

In the wake of a preliminary trade deal between the United States and China, futures continued to rise.

West Texas Intermediate oil futures for January delivery tracked up 14 cents to settle at $60.21 per barrel.

North Sea Brent crude oil futures for February delivery finished at $65.34 per barrel after inching up 12 cents.

Los Angeles-based independent oil and gas producer California Resources’ notes rose with oil futures.

The 6% senior notes due 2024 improved by 3½ points to close at 33½ bid. The 8% senior secured notes due 2022 tacked on 2½ points to close at 40 bid.

London-based contract driller Valaris’ issues followed the sector trend.

The 5.2% senior notes due 2025 added 1½ points to close at 52½ bid. The 7¾% senior notes due 2026 shot up 3 points to close at 54½ bid.

Denver-based producer Whiting Petroleum’s paper also saw positive movements.

The 6¼% senior paper due 2023 rose 5 points to close at 82 bid. The 6 5/8% senior paper due 2026 added 5¼ points to close at 70 bid.

Intelsat up, Frontier varies

In the telecom space, Intelsat’s notes trended upward, traders said.

Intelsat (Luxembourg) SA’s 8 1/8% senior notes due 2023 traded up 1½ points to close at 48½ bid. The 9½% senior notes due 2023 garnered ½ point to close at 60 bid.

The Luxembourg-based satellite operator is prepping for a public auction of C-band spectrum after months of lobbying for a private auction.

As part of the C-Band Alliance, the name and two others had asked the Federal Communications Commission for the private option with the stipulation that it would pay back a portion of the proceeds to the U.S. government.

Norwalk, Conn.-based wireline name Frontier’s issues varied in direction.

The 10½% senior notes due 2022 inched up ¼ point to close at 46¾ bid. The 11% senior notes due 2025 lost ½ point to close at 46½ bid.

Diebold active, flat

ATM name Diebold’s paper was relatively active but finished unchanged, market sources said.

The 8½% senior paper due 2024 held level at 94½ bid.

The North Canton, Ohio-based connected commerce solutions company’s paper has seen higher levels of trading in recent days after announcing positive guidance for the end of the year, with further positive guidance for 2020 and 2021.

The report was highlighted by its expectation that it will attain $4.4 billion in revenue by the end of 2019.

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