PG&E better as creditors challenge restructure; McDermott active, level on bankruptcy talk

By James McCandless

San Antonio, Jan. 2 – Light activity marked the first trading day of the new year for the distressed debt space on Thursday.

PG&E Corp.’s notes ended in a better position as a creditor group appeals to a bankruptcy court to vacate the company’s restructuring agreements.

Meanwhile, in oil and gas, McDermott International, Inc.’s issues were active but unchanged amid talk of bankruptcy.

As oil futures gained, Chesapeake Energy Corp.’s and Whiting Petroleum Corp.’s paper rose while Antero Resources Corp.’s notes varied.

Retailer L Brands, Inc.’s issues also saw mixed movements as an activist investor continues to apply pressure to make improvements.

Sector peer Bed Bath & Beyond Inc.’s paper diverged.

Elsewhere, in telecom, Intelsat SA’s and Frontier Communications Corp.’s notes moved in different directions.

PG&E better

PG&E’s notes ended the day in a better position, traders said.

The 6.05% notes due 2034 gained ¼ point to close at 105 bid.

On Tuesday, the San Francisco-based bankrupt electric utility received a challenge from an informal committee of unsecured noteholders, who are asking a bankruptcy court to vacate orders approving the company’s restructuring support agreements, Prospect News reported.

Recently, the company reached an agreement to settle with wildfire victims for $13.5 billion.

The committee said that the agreements should be vacated because the court did not have all of the relevant information before making the ruling, namely that the group would be willing to pay the settlement upfront in cash instead of half cash and half equity.

“It’s a slow day overall,” a trader said. “This was still active and topical.”

McDermott active, flat

Meanwhile, in oil and gas, McDermott’s issues were active but rigid, market sources said.

The 10 5/8% senior notes due 2024 held level at 8½ bid.

Earlier this week, news broke that the Houston-based oil and gas engineering company is in talks with creditors to file for bankruptcy in the near future.

The company has reportedly approached lenders Baupost Group and HPS Investment Partners to provide a $2 billion bankruptcy loan.

On the news, the 10 5/8% notes fell from the 12 context to near recent lows.

After a string of negative quarters in 2019, the company’s structure plunged into distressed territory, eventually announcing a strategic alternatives review in September.

Oil trends up

As oil futures gained on Thursday, distressed energy names trended upward, traders said.

West Texas Intermediate crude oil futures for February delivery rose 12 cents to settle at $61.18 per barrel.

North Sea Brent crude oil futures for March delivery finished at $66.25 per barrel after a 25 cent gain.

Oklahoma City-based independent oil and gas producer Chesapeake Energy’s paper rose.

The 8% senior paper due 2025 shifted up ¼ point to close at 59¼ bid. The 8% senior paper due 2027 gained 2¾ points to close at 61 bid.

Denver-based producer Whiting Petroleum’s notes also tracked upward.

The 6¼% senior notes due 2023 added 1¾ points to close at 84¾ bid. The 6 5/8% senior notes due 2026 picked up 1 point to close at 68¾ bid.

Antero Resources, another Denver-based producer, saw its issues vary in direction.

The 5 5/8% senior notes due 2023 was level at 80¼ bid. The 5% senior notes due 2025 dropped 3¼ points to close at 75 bid.

L Brands, Bed Bath mixed

Retailer L Brands’ paper finished the day on mixed movements, market sources said.

The 5¼% senior paper due 2028 inched up ¼ point to close at 95½ bid. The 6¾% senior paper due 2036 slid ¼ point to close at 88½ bid.

As the holiday shopping season comes to a close, the Columbus, Ohio-based department store name remains under pressure from an activist investor to make improvements to struggling segments or sell them off, namely the Victoria’s Secret brand.

The name also recently received ratings downgrades over negative comparable store sales.

Union, N.J.-based peer Bed Bath & Beyond’s long-term notes diverged.

The 5.165% senior notes due 2044 gained ¼ point to close at 74½ bid. The 4.915% senior notes due 2034 dipped ¾ point to close at 76½ bid.

Intelsat, Frontier differ

Elsewhere, in the telecom space, Intelsat’s issues moved in different directions, traders said.

Intelsat (Luxembourg) SA’s 8 1/8% senior notes due 2023 shed ¼ point to close at 61 bid. The 9½% senior notes due 2023 added ¾ point to close at 70¾ bid.

Going into the new year, the Luxembourg-based satellite operator is preparing for a public auction of C-band spectrum.

After stumbles with regulators and lawmakers, the Federal Communications Commission has been tasked with drawing up the parameters for an auction, including who receives what portion of the revenues generated.

Norwalk, Conn.-based wireline communications name Frontier’s paper also varied.

The 10½% senior paper due 2022 finished level at 49 bid. The 11% senior paper due 2025 declined by ¼ point to close at 49 bid.

© 2015 Prospect News.
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