Whiting notes decline after bankruptcy filing; J.C. Penney down as ratings lowered

By James McCandless

San Antonio, April 1 – As equity markets felt the pressure of continued economic effects of the Covid-19 pandemic, the distressed debt space saw its own losses.

Whiting Petroleum Corp.’s notes declined after the company announced that it had filed for Chapter 11 bankruptcy.

As oil futures dropped, Occidental Petroleum Corp.’s and Chesapeake Energy Corp.’s issues followed while Valaris plc’s paper improved.

Meanwhile, in retail, J.C. Penney Co., Inc.’s notes moved down after receiving a ratings downgrade a day after furloughing thousands of workers.

Sector peer L Brands, Inc.’s issues experienced a sharp drop.

Utilities name PG&E Corp.’s paper trailed as the company works through its bankruptcy amid pressures from the pandemic.

Aerospace manufacturer Bombardier Inc.’s notes extended a negative run as the company grappled with reduced production.

Elsewhere, CBL & Associates Properties, Inc.’s issues varied in the REIT space.

Whiting declines

Whiting Petroleum’s notes declined as Wednesday came to a close, traders said.

The 6¼% senior notes due 2023 lost 1¾ points to close at 5¼ bid. The 6 5/8% senior notes due 2026 shed 1 point to close at 6 bid.

On Wednesday morning, the Denver-based independent oil and gas producer announced that it has reached an agreement in principle with holders of its 1.25% convertible senior notes due 2020, 5¾% senior notes due 2021, 6¼% senior notes due 2023 and 6 5/8% senior notes due 2026 on the terms of a comprehensive restructuring, Prospect News reported.

Under the proposed agreement, holders of the four series would agree to exchange their notes for 97% of new equity, hoping to reduce the company’s debt load by more than $2.2 billion.

Existing shareholders would receive 3% of the new equity.

“It may seem fast, but the bottom line is that they had a convertible security come due this week,” a trader said. “And weak energy prices are a compounding factor.”

Last week, the company said that it had drawn $650 million from its credit facility in order to shore up liquidity.

Oil negative

As oil futures saw a drop, distressed energy names trended negatively, market sources said.

West Texas Intermediate crude oil futures for May delivery shaved off 17 cents to end the session at $20.31 per barrel.

North Sea Brent crude oil futures for June delivery settled at $24.74 per barrel after a $1.61 loss.

Houston-based producer Occidental Petroleum’s issues followed futures downward.

The 2.9% senior notes due 2024 shaved off ¾ point to close at 53¾ bid. The 2.7% senior notes due 2022 dipped 1 point to close at 69¾ bid.

Oklahoma City-based peer Chesapeake Energy’s paper was also pushed lower.

The 11½% notes due 2025 fell ¼ point to close at 16¾ bid.

London-based contract driller Valaris’ notes improved, going against the prevailing trend.

The 5.2% senior notes due 2025 added 2 points to close at 11 bid. The 7¾% senior notes due 2026 picked up 1½ points to close at 10½ bid.

J.C. Penney, L Brands down

Meanwhile, in retail, J.C. Penney’s issues moved down, traders said.

The 5 7/8% senior secured notes due 2023 slipped 1 point to close at 35 bid.

The Plano, Tex.-based department store name saw negativity during Wednesday trading as Fitch Ratings lowered J.C. Penney’s ratings.

The agency cut the long-term issuer default ratings of the company and its subsidiary J.C. Penney Corp., Inc. to CCC- from CCC+.

Fitch argues that concerns about the retailer’s liquidity are heightened amid significant business interruption due to the coronavirus pandemic and an expected downturn in discretionary spending.

On Tuesday, the company announced that it would extend the temporary closure of its retail locations indefinitely and furlough about 90,000 workers.

Columbus, Ohio-based sector peer L Brands’ paper experienced a sharp drop.

The 6¾% senior notes due 2036 were pushed down 3½ points to close at 71½ bid. The 5¼% senior paper due 2028 gave up 3½ points to close at 73½ bid.

PG&E trails

Utilities name PG&E’s notes trailed as the afternoon ended, market sources said.

The 6.05% notes due 2034 declined by 4½ points to close at 98 bid.

News broke late Tuesday that California regulators are considering dropping a plan to fine the San Francisco-based bankrupt electric utility an additional $462 million over its role in recent wildfires.

One of the commissioners of the Public Utility Commission argued that the additional fine would violate its agreement with investors to sell $9 billion in stock and fund $25.5 billion in settlement payments to wildfire victims.

The commissioner also cited current weak market conditions.

Also this week, the company clarified that it would not pay a recently agreed to $4 million criminal fine out of its $13.5 billion wildfire settlement fund.

Bombardier loses

Aerospace name Bombardier’s issues extended a negative run, traders said.

The 7 7/8% senior notes due 2027 lost 5¾ points to close at 63 bid.

The Montreal-based aerospace manufacturer’s structure saw a third straight day of negativity as the company braces for weeks of reduced operations amid the pandemic, idling aircraft and rail production across Canada.

After announcing the move last week, Fitch issued downgrades on its ratings on Tuesday, slashing the company’s long-term issuer default rating and senior unsecured debt ratings while removing all of its ratings from positive watch.

CBL varies

Elsewhere, property name CBL’s paper varied in direction, market sources said.

The 5¼% senior notes due 2023 dived 7 points to close at 18 bid. The 4.6% senior paper due 2024 jumped up 8¾ points to close at 29½ bid.

On Tuesday, the Chattanooga, Tenn.-based real estate investment trust was another name on the receiving end of a Fitch downgrade.

Expecting a default or distressed exchange within the next 12 months, the agency cut the long-term issuer default ratings of the company and its operating partnership, CBL & Associates, LP, to CC from CCC+.

Last week, the company said it would temporarily shutter its properties and draw $280 million under a credit facility to combat a weakened market.

© 2015 Prospect News.
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