Occidental Petroleum notes gain as new chairman named; Rayonier down as ratings lowered

By James McCandless

San Antonio, March 24 – Tuesday’s session saw a rebound for markets as the distressed debt space continued to focus on energy names.

Occidental Petroleum Corp.’s notes were better by the close after announcing the appointment of a former executive to its board of directors.

As oil futures picked up modest gains, Whiting Petroleum Corp.’s, California Resources Corp.’s and Chesapeake Energy Corp.’s issues followed suit.

Meanwhile, chemicals name Rayonier Advanced Materials Inc.’s paper trailed as it received a ratings downgrade.

Propane name Ferrellgas Partners LP’s notes have seen positivity in the last week despite recent ratings downgrades.

In the utilities space, PG&E Corp.’s issues tracked higher in the wake of the company agreeing to plead guilty to charges related to a recent wildfire.

The REIT space saw Washington Prime Group Inc.’s and CBL & Associates Properties, Inc.’s notes improve.

Occidental better

Occidental Petroleum’s notes moved to a better position on Tuesday, traders said.

The 2.9% senior notes due 2024 inched up ¼ point to close at 54¾ bid. The 2.7% senior notes due 2022 rose 2½ points to close at 63 bid.

By the close, about $37 million of the two tranches changed hands.

On Tuesday morning, the Houston-based independent oil and gas producer announced that it would name former chief executive officer Stephen Chazen as its non-executive chairman of the board of directors.

The move is a bid to quell a long dispute with activist investor Carl Icahn, who owns about a 10% stake in the company.

After months of applying pressure on Occidental to improve operations, over the weekend the two sides neared a deal that would give Icahn two or more board seats.

“I would think that if the market were stronger, then this fight would still be going on,” a trader said.

In response to deteriorated market conditions, Fitch Ratings downgraded its long-term issuer default rating and put all other ratings on negative watch on Monday.

Oil gains

As oil futures picked up modest gains, distressed energy names followed suit, market sources said.

West Texas Intermediate crude oil futures for May delivery pushed up 65 cents to settle at $24.01 per barrel.

North Sea Brent crude oil futures for May delivery finished the session at $27.15 after a 12 cent pickup.

Denver-based producer Whiting Petroleum’s issues were on the rise.

The 6¼% senior notes due 2023 gained 3 points to close at 11 bid. The 6 5/8% senior notes due 2026 tacked on 3 points to close at 12 bid.

Los Angeles-based peer California Resources’ paper also ended on better footing.

The 6% senior paper due 2024 garnered ¼ point to close at 4¼ bid. The 8% senior secured paper due 2022 improved by 2 points to close at 6 bid.

Oklahoma City-based oil and gas producer Chesapeake Energy’s notes followed the trend.

The 11½% notes due 2025 tacked on 5 points to close at 15½ bid.

“Things might look good today, but we’re living in volatility,” a trader said.

Rayonier trails

Meanwhile, chemicals name Rayonier’s issues trailed, traders said.

The 5½% senior notes due 2024 declined by 5 points to close at 42 bid.

The Jacksonville, Fla.-based chemical products producer saw negativity as its Rayonier A.M. Products Inc. segment received a ratings downgrade from Moody’s Investors Service.

The agency lowered its corporate family rating, probability of default rating and senior unsecured bond rating.

The speculative grade liquidity rating was raised, and a negative outlook was maintained.

Moody’s cited weaker-than-anticipated operating and financial performance and high leverage metrics that may improve slightly as commodities markets remain challenged.

Ferrellgas up

Propane name Ferrellgas’ paper trended positively by the end of the day, market sources said.

The 6¾% senior paper due 2022 moved up 3½ points to close at 82¼ bid.

This month, the Overland Park, Kan.-based propane seller has received a pair of ratings downgrades as the company faces a precarious capital structure and a weakened commodities market.

Last Tuesday, Moody’s trimmed the company’s corporate family rating, probability of default rating and senior unsecured notes rating.

Later that week, S&P Global Ratings cut the ratings on the company and its $1.5 billion of senior unsecured notes maturing in 2021-2023.

Both agencies argue that the company is very likely to default on its $357 million structurally subordinated notes within the next three months in light of instability in financial markets.

PG&E notes higher

In the utilities space, PG&E’s notes tracked higher, traders said.

The 6.05% notes due 2034 rose 5½ points to close at 96 bid. The 3.3% senior notes due 2027 jumped up 9 points to close at 92 bid.

After the close on Monday, the San Francisco-based bankrupt electric utility announced that it had entered a plea agreement to resolve all state charges related to the 2018 Camp Fire in California.

As part of the agreement, the company will plead guilty to 84 counts of involuntary manslaughter and one count of unlawfully starting a fire.

The utility will also pay up to $4 million in related fines.

Washington Prime improves

The property space saw Washington Prime’s issues improve, market sources said.

The 6.45% senior notes due 2024 gained 3½ points to close at 60¼ bid.

Following the lead of a slate of national retailers in recent days, the Columbus, Ohio-based retail-focused real estate investment trust announced on Tuesday that it is temporarily closing its assets with an indoor common area.

Its properties featuring open-air common areas will remain open.

The company also offered up its closed assets as potential distribution centers for government agencies.

Chattanooga, Tenn.-based REIT CBL’s paper also pushed upward.

The 5¼% senior notes due 2023 tacked on ¾ point to close at 26¾ bid. The 4.6% senior notes due 2024 added 2 points to close at 27 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.