PG&E notes gain on plan support; Occidental Petroleum bonds rise as OPEC strikes deal

By James McCandless

San Antonio, April 9 – With most distressed debt trading petering out after lunch on an early close, the holiday shortened week ended with a focus on utilities and energy names.

PG&E Corp.’s notes gained after the company received statements of support for its settlements and reorganization plan from wildfire victims.

Meanwhile, Occidental Petroleum Corp.’s issues improved as OPEC struck a deal to curb oil production.

Oil futures declined on the news, followed by California Resources Corp.’s paper while Chesapeake Energy Corp.’s and Whiting Petroleum Corp.’s notes varied.

In the telecom space, Digicel Group Ltd.’s issues pushed upward as the company announced the extension of a consent solicitation.

Sector peer Intelsat SA’s paper also saw positivity.

Pharmaceutical names Mallinckrodt plc’s notes diverged while Endo International plc’s issues picked up steam.

PG&E gains

PG&E’s notes gained as the week headed for the close, traders said.

The 6.05% senior notes due 2034 popped up 7½ points to close at 107½ bid.

The San Francisco-based bankrupt electric utility said that it has received statements of continued support for its settlement agreement with wildfire victims and plan of reorganization, Prospect News reported.

The company said the plan treats all victims fairly, protects customers and will enable it to emerge from Chapter 11 as a financially sound utility positioned to pay victims as soon as possible and support California for the long term.

On Wednesday, the judge in its bankruptcy case ruled that a committee of attorneys for wildfire victims could not delay a vote on whether to approve the utility’s restructuring plan.

“Someone looks like they were angling for more money but that looks squashed now,” a trader said.

The company is working to exit bankruptcy by June 30 in order to meet the deadline to participate in California’s newly set up wildfire victims fund.

Over the last six months, PG&E has struck billions of dollars in settlement agreements with victims, insurance carriers and government agencies.

Occidental up

Meanwhile, in the energy space, Occidental Petroleum’s notes improved, market sources said.

The 2.9% senior notes due 2024 jumped up 12½ points to close at 82½ bid. The 2.7% senior notes due 2022 rose 7 points to close at 88½ bid.

At the top of distressed energy trading, the Houston-based independent oil and gas producer’s structure was a rare gainer in the sector after news broke that OPEC struck a deal to reduce oil production.

The group agreed to cut production by 10 million barrels a day or 10%.

Also on Thursday, news broke that the company is urging the federal government to provide financial aid to the industry.

Occidental is having its employees write letters to their representatives asking for liquidity for oil and gas companies.

Oil futures off

In reaction to the OPEC deal, oil futures and distressed sector tranches trended downward, traders said.

West Texas Intermediate crude oil futures for May delivery chalked off $2.33 to settle at $22.76 per barrel.

North Sea Brent crude oil futures for June delivery fell to $31.48 per barrel after a $1.36 drop.

Los Angeles-based producer California Resources’ paper followed futures in their decline.

The 6% senior paper due 2024 shaved off ½ point to close at 5 bid. The 8% senior secured notes due 2022 fell ½ point to close at 3¼ bid.

Oklahoma City-based peer Chesapeake Energy’s notes varied in direction.

The 11½% notes due 2025 held level to close at 14½ bid. The 7% senior notes due 2024 dropped 1 point to close at 8½ bid.

Denver-based producer Whiting Petroleum’s issues also saw mixed activity.

The 6¼% senior notes due 2023 tacked on ¼ point to close at 10¾ bid. The 6 5/8% senior notes due 2026 shed ½ point to close at 10¾ bid.

Digicel, Intelsat positive

In the telecom space, Digicel’s paper pushed upward, market sources said.

The 8¼% senior secured notes due 2022 added ¾ point to close at 61¼ bid. The 8¼% senior paper due 2022 tacked on ¼ point to close at 61¼ bid.

Late Wednesday, the Kingston, Jamaica-based mobile phone network provider announced that Digicel Finance Ltd. and Digicel Holdings (Bermuda) Ltd. have extended the expiration of the consent solicitation seeking consents to effect certain proposed amendments to the indenture governing the existing 8¾% senior secured notes due 2024.

The solicitation is now set to expire at the end of April 28 from an original deadline of April 8.

Following the move, Moody’s Investors Service issued ratings downgrades for the company, cutting its probability of default rating and Digicel International Finance Ltd.’s senior secured rating.

The agency argues that the company faces a higher likelihood of some form of distressed exchange in the near term.

Luxembourg-based satellite operator Intelsat’s notes also saw positivity.

Intelsat Jackson Holdings SA’s 5½% senior notes due 2023 garnered 6 points to close at 64 bid. Intelsat (Luxembourg) SA’s 8 1/8% senior notes due 2023 improved by 1½ points to close at 17½ bid.

Mallinckrodt mixed

Pharmaceutical name Mallinckrodt’s issues diverged in direction, traders said.

The 5¾% senior notes due 2022 rose 3½ points to close at 55¾ bid. The 4 7/8% senior notes due 2020 slipped 2½ points to close at 98 bid.

This week, the Staines-upon-Thames, U.K.-based drug maker’s tranches saw a boost of activity after announcing the start of a private exchange of its $495 million 4 7/8% senior notes due 2020 for new 10% notes due 2025 at a rate of $1,000 of new notes for every $1,000 of existing notes exchanged.

The amount is less than half of the originally planned $1.2 billion exchange, which was reduced as market conditions weakened.

Dublin-based generics producer Endo’s paper picked up steam.

The 6% senior notes due 2025 rose 1¼ points to close at 71 bid.

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