PG&E notes trade higher amid payout dispute; Endo active as settlement announced

By James McCandless

San Antonio, Jan. 10 – At the tail end of the week, the distressed debt space was driven by newsmakers in utilities, pharmaceuticals and energy.

PG&E Corp.’s notes tracked higher as government agencies and wildfire victims enter a dispute over allocation of settlement money.

Meanwhile, in pharma, Endo International plc’s issues varied as news broke of a settlement reached with Oklahoma over opioid-related claims.

Sector peer Mallinckrodt plc’s paper also diverged in direction.

In oil and gas, Range Resources Corp.’s notes saw gains in the aftermath of a pricing of senior notes.

As oil futures fell on Friday, Whiting Petroleum Corp.’s issues moved lower while Southwestern Energy Co.’s paper gained and California Resources Corp.’s notes were mixed.

Elsewhere, in retail, L Brands, Inc.’s issues improved while Rite Aid Corp.’s paper was flat as the sector reckons with weak holiday sales.

PG&E higher

PG&E’s notes tracked higher as the week came to an end, traders said.

The 6.05% notes due 2034 gained 2½ points to close at 107½ bid.

News broke on Friday that wildfire victims that are being paid $13.5 billion from the San Francisco-based bankrupt electric utility are involved in a dispute with state and federal emergency management agencies.

FEMA and its California counterpart are requesting more than $6 billion from the settlement for providing emergency services during recent wildfires.

Representatives for the victim group said that the request is detrimental to on-the-ground recovery, a sentiment that is backed by the company.

Also on Friday, California governor Gavin Newsom said that the state is preparing for a potential takeover of the utility, an idea that Newsom first floated in November.

Endo, Mallinckrodt eyed

Meanwhile, in the pharma space, Endo’s issues varied, market sources said.

The 6% senior notes due 2025 rose ¾ point to close at 70½ bid. The 6% senior notes due 2023 held level at 76¼ bid.

On Friday afternoon, the Dublin-based drugmaker announced that it had reached an $8.75 million settlement with the state of Oklahoma over opioid-related claims.

Specifically, the state argued that the company had helped propagate the opioid epidemic.

As part of the settlement, the company committed to not employing or contracting representatives in the state and will not pay for promotional materials.

Endo also did not admit wrongdoing.

“Pharma has taken a back seat to other sectors in the last month or so,” a trader said. “But it continues to be topical.”

Staines-upon-Thames, England-based Mallinckrodt’s paper also diverged in direction.

The 5¾% senior notes due 2022 shaved off ¾ point to close at 38 bid. The 4 7/8% senior paper due 2020 was unchanged at 70 bid.

Range gains

In oil and gas, Range Resources’ notes were seen gaining, traders said.

The 4 7/8% senior notes due 2025 picked up ¾ point to close at 86 bid.

Following the close on Thursday, the Fort Worth-based independent oil and gas producer sold an upsized $550 million issue of six-year senior notes at par to yield 9¼%.

This week saw several financial maneuvers from the company, including a cash tender offer to purchase up to $500 million of its outstanding 5¾% senior notes due 2021, 5 7/8% senior notes due 2022 and 5% senior notes due 2022.

The moves come on the heels of announcing that the company would reduce its drilling budget for the year and scrap its dividend.

Oil names mixed

As oil futures contracted, distressed energy names saw mixed activity, market sources said.

West Texas Intermediate crude oil futures for February delivery dropped 52 cents to settle at $59.04 per barrel.

North Sea Brent crude oil futures for March delivery ended the week at $64.98 per barrel after a 39 cent loss.

Denver-based producer Whiting Petroleum’s issues were seen trailing.

The 6¼% senior notes due 2023 shed ½ point to close at 87½ bid. The 6 5/8% senior notes due 2026 were docked 1½ points to close at 69¾ bid.

Spring, Tex.-based sector peer Southwestern Energy’s paper pushed higher.

The 7½% senior notes due 2026 tacked on 1 point to close at 91½ bid.

Los Angeles-based producer California Resources’ notes were mixed.

The 6% senior notes due 2024 dropped 2¼ points to close at 34 bid. The 8% senior secured notes due 2022 were level at 42½ bid.

L Brands up, Rite Aid flat

Elsewhere, in the retail space, L Brands’ issues improved, traders said.

The 6¾% senior notes due 2036 inched up ¼ point to close at 90¼ bid. The 5¼% senior notes due 2028 gained 1¼ points to close at 96½ bid.

The Columbus, Ohio-based department store chain released its holiday sales data on Thursday, showing weakness in line with the rest of the sector.

Sales by Jan. 4 were reported at $3.9 billion, lower than the previous year.

The report was also highlighted by a 3% reduction in overall comparable-store sales while Victoria’s Secret comparable sales dived 12%.

Camp Hill, Pa.-based drug store name Rite Aid’s paper was active but flat.

The 6 1/8% senior notes due 2023 held level at 93 bid.

© 2015 Prospect News.
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