Frontier Communications falls amid bankruptcy worries; Denbury lower after ratings cut

By James McCandless

San Antonio, March 11 – More pressure hit the distressed debt market, with coronavirus fears continuing to weaken several sectors.

Frontier Communications Corp.’s notes fell a day after news reports indicated that the company would be forgoing a coupon payment.

Sector peer Intelsat SA’s issues were similarly under water.

In the energy space, Denbury Resources Inc.’s paper declined after receiving a ratings downgrade during the day.

Hydrocarbon products name Calumet Specialty Products Partners, LP’s notes dipped after announcing a chief executive officer transition.

Meanwhile, as oil futures slipped, California Resources Corp.’s and Whiting Petroleum Corp.’s issues varied in direction.

In utilities, PG&E Corp.’s paper bounced higher in the wake of its settlement with federal and state emergency management agencies.

Elsewhere, in retail, Revlon, Inc.’s and L Brands, Inc.’s notes shifted lower.

Frontier, Intelsat fall

Frontier’s notes fell as the week hit its midpoint, traders said.

The 10½% senior notes due 2022 shed 6 points to close at 37 bid. The 11% senior notes due 2025 dived 7 points to close at 36 bid.

The 10½% notes saw about $21 million trading by the end of the session.

On Tuesday, news broke that the Norwalk, Conn.-based wireline communicator is planning on forgoing a slate of March 15 coupon payments.

The company is in talks with creditors to file for Chapter 11 bankruptcy with a restructuring plan that would secure DIP financing and lead to a reduction in its debt.

“It’s continued to be topical today despite everything else going on,” a trader said.

Luxembourg-based satellite operator Intelsat’s issues were similarly under water.

Intelsat (Luxembourg) SA’s 8 1/8% senior notes due 2023 lost 4¼ points to close at 33 bid. The 9½% senior notes due 2023 dipped 3 points to close at 47½ bid.

Denbury declines

In the energy space, Denbury Resources’ paper declined, market sources said.

The 7¾% notes due 2024 were docked 2¾ points to close at 32½ bid.

During the Wednesday session, Moody’s Investors Service issued ratings downgrades for the Houston-based independent oil and gas producer.

The agency lowered its corporate family rating, probability of default rating, speculative grade liquidity rating and issue level ratings.

The outlook was revised to negative.

Moody’s said that the downgrades are a reflection of its expectation of lower revenue through 2021, which adds uncertainty to its ability to refinance 2021 maturities.

“Like a lot of other names in the space, they might limp out of 2020,” a trader said. “But energy prices need to stabilize.”

Calumet dips

Hydrocarbon name Calumet’s notes saw a dip, traders said.

The 7¾% senior notes due 2023 gave back 2¼ points to close at 89¾ bid. The 11% senior notes due 2025 were pushed down 2½ points to close at 84¾ bid.

Early Wednesday morning, the Indianapolis-based company announced that current CEO Tim Go plans to resign from the company effective June 1.

Board member and long-time energy executive Steve Mawer has been tapped to step into the position.

Earlier this month, the company reported a loss per share of 23 cents, better than the 26 cents per share loss that analysts had expected.

Oil slips

Meanwhile, distressed energy names showed mixed results as oil futures slipped, market sources said.

West Texas Intermediate crude oil futures for April delivery declined by $1.38 to settle at $32.98 per barrel.

North Sea Brent crude oil futures for May delivery finished at $35.79 per barrel after a $1.43 loss.

Los Angeles-based producer California Resources’ issues varied in direction.

The 6% senior notes due 2024 added 1 point to close at 13½ bid. The 8% senior secured notes due 2022 lost 1¼ points to close at 9 bid.

Denver-based peer Whiting Petroleum’s paper also diverged.

The 6¼% senior notes due 2023 rose 1 point to close at 16 bid. The 6 5/8% senior notes due 2026 held level at 16 bid.

PG&E higher

In utilities, PG&E’s notes bounced higher by the end of the session, traders said.

The 6.05% notes due 2034 gained 2½ points to close at 114 bid.

The San Francisco-based bankrupt electric utility’s structure bounced higher in the wake of Tuesday’s news that the company had reached a settlement with federal and state emergency management agencies.

After originally petitioning for $4 billion, the Federal Emergency Management Agency agreed to settle for $1 billion in the name of making sure wildfire victims receive settlements.

Its California counterpart agreed to drop its claim.

The deal still requires approval in bankruptcy court.

Revlon, L Brands lower

Elsewhere, in retail, Revlon’s issues shifted lower, market sources said.

The 5¾% senior notes due 2021 lopped off 4 points to close at 92¼ bid. The 6¼% senior notes due 2024 dipped 4¾ points to close at 37¼ bid.

Earlier this week, the New York-based cosmetics producer announced several measures it was taking in order to execute a turnaround.

The company reached an agreement with Jefferies Finance LLC for $850 million of senior secured term loan facilities broken up into an up to $300 million term loan and an up to $550 million term loan.

Revlon would also lay off about 1,000 employees, which it expects to lead to $200 million to $230 million in savings by the end of 2022.

Columbus, Ohio-based retail name L Brands’ paper also saw negativity.

The 6¾% senior paper due 2036 weakened by 1¾ points to close at 95½ bid. The 5¼% senior notes due 2028 declined by 2¼ points to close at 90½ bid.

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