PG&E notes trade lower as new board elected; Bombardier declines amid layoff news

By James McCandless

San Antonio, June 11 – In the tail end of the week, the distressed debt market mirrored the weakness of other markets as new economic worries took hold.

PG&E Corp.’s notes were pushed down in the wake of 11 new board members being elected as the company works its way to a bankruptcy exit.

Meanwhile, manufacturer Bombardier Inc.’s issues dipped after the company announced a new round of layoffs.

Car renter Hertz Global Holdings, Inc.’s paper was knocked down on fresh worries about the coronavirus and the economy.

Air travel names American Airlines Group Inc.’s and United Airlines Holdings, Inc.’s notes both saw dives on the same economic concerns.

As new demand worries tripped up oil futures, Occidental Petroleum Corp.’s and Whiting Petroleum Corp.’s issues followed while Chesapeake Energy Corp.’s paper varied.

Elsewhere, satellite operator Intelsat SA’s notes were under water.

PG&E down

PG&E’s notes were pushed down as the session finished, traders said.

The 6.05% notes due 2034 gave up 1¼ points to close at 117½ bid.

After the close on Wednesday, the San Francisco-based electric utility announced 11 new directors for its board of directors and the retirement of 10 of the 13 current members, including the board chair, Prospect News reported.

As the company works to exit Chapter 11 bankruptcy by the end of June, the move is part of an overall effort to strengthen oversight and safety measures.

This week, the utility said that it would pursue underwritten public offerings of common stock and equity units in order to fund its emergence, expecting $5.75 billion of gross proceeds from the offerings and $3.25 billion from private stock sales.

Recently, California regulators approved PG&E’s restructuring plan.

The judge in its bankruptcy case is expected to rule on the plan before the end of the month.

Bombardier dips

Meanwhile, air and rail manufacturer Bombardier’s issue fell, market sources said.

The 7½% senior notes due 2025 declined by 8½ points to close at 67½ bid. The 8¾% senior notes due 2021 trailed by 6½ points to close at 80 bid.

News broke on Thursday that the Montreal-based air and rail manufacturer will lay off 600 people working in its Northern Ireland facilities.

Last week, the company announced 2,500 layoffs, effecting its Canadian operations, as it expects demand for aircraft to shrink.

Company executives expect unit deliveries to decline by about 30% year over year.

Bombardier recently brought back its manufacturing capabilities in Canada and Europe after coronavirus restrictions were relaxed.

Hertz lower

Car renter Hertz’s paper was knocked lower as Thursday came to a close, traders said.

The 6¼% senior paper due 2022 moved down 4 points to close at 36¼ bid. The 5½% senior notes due 2024 weakened by 3½ points to close at 36 bid.

The Estero, Fla.-based car rental company’s structure was seen falling from recent highs amid renewed concern about a resurgence of the coronavirus and the impact on the economy.

During the session, the Federal Reserve outlined its view of the economy for the rest of the year and into the next, painting a picture of a weak recovery.

In the last few weeks, positivity from the markets drove up travel-related names as coronavirus mandates from various governments were relaxed.

“Hertz has taken the spotlight,” a trader said. “But the people driving up the stock are eventually going to be empty-handed.”

American, United dive

In the air travel space, American Airlines’ notes took a dive, market sources said.

The 5% senior notes due 2022 cratered 11¼ points to close at 61 bid. The 3¾% senior notes due 2025 lost 8½ points to close at 52¾ bid.

As part of the travel industry, the Fort Worth-based airline was another name to see large losses in Thursday’s activity.

The market’s fresh worries about a second wave of the coronavirus and a weak recovery put a damper on the previously expected influx of domestic travelers in the coming weeks.

The company’s chief executive officer has previously warned employees of potential layoffs as demand remains low.

Chicago-based sector peer United Airlines’ issues also saw a downward shift.

The 5% senior notes due 2024 chopped off 2½ points to close at 82 bid. The 4¼% senior notes due 2022 gave up 4¼ points to close at 84¼ bid.

Oil weak

New demand worries led to weaker oil futures and distressed tranches, traders said.

As the Federal Reserve outlined its negative picture of the economy through 2021, worries about oil demand resurfaced.

West Texas Intermediate crude oil futures for July delivery dropped $3.26 to finish at $36.24 per barrel.

North Sea Brent crude oil futures for August delivery capped the session at $38.55 per barrel after a $3.18 loss.

Houston-based independent oil and gas producer Occidental Petroleum’s paper followed futures to lower levels.

The 2.9% senior paper due 2024 fell 3¼ points to close at 82½ bid. The 2.7% senior paper due 2022 lost 3¼ points to close at 91 bid.

Denver-based producer Whiting Petroleum’s notes joined the trend.

The 6¼% senior notes due 2023 were docked 2 points to close at 16½ bid. The 6 5/8% senior notes due slid 3 points to close at 15 bid.

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

The 11½% notes due 2025 rose ¼ point to close at 6½ bid. The 7% senior notes due 2024 shaved off ½ point to close at 5 bid.

Intelsat declines

Elsewhere, in the telecom space, Intelsat’s paper was under water, market sources said.

Intelsat Jackson Holdings SA’s 5½% senior paper due 2023 trailed by 1¾ points to close at 57¾ bid. Intelsat (Luxembourg) SA’s 8 1/8% senior notes due 2023 dropped 2 points to close at 4 bid.

News broke on Tuesday that the Luxembourg-based satellite operator received final court approval to access $1 billion in debtor-in-possession financing.

In the short term, the company plans to use the money to participate in the accelerated clearing of C-band spectrum in time to participate in the Federal Communications Commission’s spectrum auction in December.

© 2015 Prospect News.
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