Whiting falls as ratings downgraded; PG&E lower in utilities space

By James McCandless

San Antonio, March 6 – As coronavirus concerns continued to permeate markets, the distressed space was no different with energy and telecom names as the main target.

Whiting Petroleum Corp.’s notes fell after the company received a ratings downgrade amid a confluence of negative factors.

Oil futures were knocked down, with the negativity spilling into Oasis Petroleum Inc.’s, California Resources Corp.’s and Laredo Petroleum, Inc.’s issues.

Meanwhile, in utilities, PG&E Corp.’s paper trended lower as the company seeks court approval for short-term and long-term employee incentive plans.

Telecom company Intelsat SA’s notes declined a day after the company faced negative headlines over share sales.

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

In the pharma sector, Mallinckrodt plc’s and Endo International plc’s paper drifted lower.

Whiting falls

Whiting Petroleum’s notes fell at the end of a tumultuous week, traders said.

The 6¼% senior notes due 2023 cratered 10¼ points to close at 36 bid. The 6 5/8% senior notes due 2026 lost 3¾ points to close at 30½ bid.

On Friday, S&P Global Ratings issued downgrades for the Denver-based independent oil and gas producer.

The agency lowered the company’s senior unsecured debt rating to CCC+ from B- and its senior secured debt rating to B from BB+.

S&P said that the new ratings reflect a deterioration in the company’s credit quality, marked by weak energy prices and toughening market conditions compounded by the coronavirus.

The outlook is negative.

“They have a lot coming due over the next year,” a trader said. “If current conditions continue, it may be hard for holders to recoup the debt.”

The company has about $1 billion coming due over the next 13 months.

Oil tanks

Oil futures were knocked down, with negativity spilling to distressed energy tranches, market sources said.

Crude prices dove after Russia voiced its objections to the steep output cuts proposed by OPEC.

West Texas Intermediate crude oil futures for April delivery dived $4.62 to settle the week at $41.28 per barrel.

North Sea Brent crude oil futures for May delivery finished at $45.27 per barrel after a $4.72 slide.

Houston-based producer Oasis Petroleum’s issues moved lower.

The 6¼% senior notes due 2026 crashed 9¾ points to close at 52 bid.

Los Angeles-based peer California Resources’ paper followed the sector trend.

The 6% senior paper due 2024 declined by 4¾ points to close at 17¾ bid. The 8% senior secured paper due 2022 gave back 1¾ points to close at 19¼ bid.

Tulsa, Okla.-based producer Laredo Petroleum’s notes also took a hit.

The 9½% senior notes due 2025 slid 10¾ points to close at 58 bid.

PG&E lower

Meanwhile, in utilities, PG&E’s issues trended lower, traders said.

The 6.05% notes due 2034 shaved off ¼ point to close at 116¼ bid.

Late Thursday, news broke that the San Francisco-based bankrupt electric utility was seeking a bankruptcy court’s approval of short-term and long-term employee incentive plans that would pay out a maximum of $266 million and $187.8 million, respectively, Prospect News reported.

The short-term plan would pay out $89 million at the threshold performance level, $177.5 million at the target level and $266 million at maximum performance.

Under the long-term plan, the name would pay out $28.2 million in awards, at the target level $75.1 million and at the maximum level $187.8 million.

About 10,000 employees and senior executives are eligible for the short-term plan while 400 senior employees would be eligible for the long-term plan.

A hearing on the subject is scheduled for March 25.

Intelsat, Frontier decline

Telecom company Intelsat’s paper ended the session in decline, market sources said.

Intelsat Jackson Holdings SA’s 8½% senior paper due 2024 fell ¾ point to close at 81 bid. Intelsat (Luxembourg) SA’s 8 1/8% senior paper due 2023 was pulled down 1½ points to close at 34½ bid.

The Luxembourg-based satellite operator was marred by negative headlines on Thursday about alleged insider knowledge that led to share sales.

A New York Post report alleged that before a November meeting between the company’s chief executive officer and a senior Federal Communications Commission official became public, two private equity firms and large shareholders sold a mass of stock.

“Someone’s trying to stir something up because they’ve lost so much for holding on to the stock,” a trader said. “That seems like the likely explanation.”

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

The 10½% senior notes due 2022 trailed 1 point to close at 44 bid. The 11% senior notes due 2025 dropped 3¾ points to close at 40 bid.

Mallinckrodt, Endo drift

Elsewhere, Mallinckrodt’s issues were seen drifting in the pharmaceutical space, traders said.

The 5¾% senior notes due 2022 shaved off ¼ point to close at 70½ bid. The 5 5/8% senior notes due 2023 were dragged 1¾ points to close at 44 bid.

On Tuesday, the Staines-upon-Thames, England-based drug producer’s structure started a four-day negative streak after the U.S. government announced that it was filing a lawsuit against a U.S. subsidiary.

The suit alleges that Mallinckrodt ARD LLC artificially inflated the price of its popular Acthar Gel, defrauding Medicaid as a result.

Dublin-based generics name Endo’s paper made similar movements.

The 6% senior paper due 2025 shifted down 3 points to close at 74 bid. The 6% senior paper due 2023 slipped 3¼ points to close at 79¾ bid.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.