Intelsat lower as industry urges regulatory action; Pacific Drilling down on arbitration

By James McCandless

San Antonio, Jan. 15 – Wednesday’s distressed debt session saw activity spurred by developments in the telecom and energy industries.

Intelsat SA’s notes headed lower throughout the day as the C-Band Alliance urged speed from the Federal Communications Commission concerning 5G transition.

Sector peer Frontier Communications Corp.’s issues were trimmed.

Meanwhile, in oil and gas, Pacific Drilling SA’s paper shifted downward after the company landed on the wrong side of an arbitration decision.

Crude futures were taken down a peg, followed by Gulfport Energy Corp.’s, Antero Resources Corp.’s and Whiting Petroleum Corp.’s notes.

In the utilities space, PG&E Corp.’s issues saw another rise as the company reportedly nears a deal concerning restructuring with creditors.

Business software name Exela Technologies, Inc.’s paper improved following news of its closing on a $160 million loan.

Elsewhere, in pharma, Mallinckrodt plc’s notes continued to gain on the back of the company’s highlighting of its debt slashing efforts.

Intelsat, Frontier lower

Intelsat’s notes headed lower throughout Wednesday’s activity, traders said.

Intelsat Jackson Holdings SA’s 9¾% senior notes due 2025 shaved off ¾ point to close at 93½ bid. Intelsat (Luxembourg) SA’s 8 1/8% senior notes due 2023 lost 2¾ points to close at 62¼ bid.

At the end of the day, about $24 million of the 9¾% notes changed hands.

On Tuesday, the Luxembourg-based satellite operator, as part of the C-Band Alliance, urged the FCC to accelerate the transition process of transitioning C-band usage from satellite transmissions to 5G mobile.

The group argued that continued delay in the process is detrimental to economic growth, namely a potential loss of up to $50 billion in consumer surplus.

In line with its recent lobbying, the group continues to push the regulatory body to quickly establish the parameters for a C-band spectrum auction.

Norwalk, Conn.-based wireline communications name Frontier’s issues were trimmed.

The 10½% senior notes due 2022 fell ¼ point to close at 44¾ bid. The 11% senior notes due 2025 dipped ¼ point to close at 44¾ bid.

Pacific Drilling down

Meanwhile, in oil and gas, Pacific Drilling’s paper shifted downward, market sources said.

The 8 3/8% paper due 2023 shed 2¾ points to close at 88¾ bid. The 12% paper due 2024 crashed 14¼ points to close at 49 bid.

News broke on Wednesday that the Houston-based offshore driller lost an arbitration tribunal to Samsung Heavy Industries to the tune of $320 million.

The company said that it did not expect the decision to have any adverse effects on its operations or cause it to default on any of its contracts.

Despite this, the company said that it expects to report a loss of approximately $225 million for the fourth quarter.

Oil dips

Crude futures were taken down a peg by the day’s end, traders said.

While futures initially saw positivity on news of the signing of a preliminary trade deal between the United States and China, a report of a build in U.S. crude supplies turned them negative.

West Texas Intermediate crude oil futures for February delivery were off 42 cents to finish at $57.81 per barrel.

North Sea Brent crude oil futures for March delivery closed at $64 per barrel after losing 49 cents.

Oklahoma City-based independent oil and gas producer Gulfport Energy’s notes followed futures lower.

The 6% senior notes due 2024 dropped 1¾ points to close at 65¾ bid. The 6 5/8% senior notes due 2023 gave back 1¾ points to close at 78 bid.

Denver-based producer Antero Resources’ issues were depressed.

The 5 5/8% senior notes due 2023 lost ¾ point to close at 76½ bid.

Whiting Petroleum, another Denver-based producer, saw its paper follow the sector trend.

The 6¼% senior notes due 2023 declined by ½ point to close at 85¼ bid. The 6 5/8% senior paper due 2026 shed 1½ points to close at 65½ bid.

PG&E rises

In the utilities space, PG&E’s notes saw another rise, market sources said.

The 6.05% notes due 2034 picked up 1¼ points to close at 113¾ bid.

About $32 million of the notes ended up on the tape.

The San Francisco-based bankrupt utility’s notes have sustained a four-day positive streak, buoyed on recent news that the company is close to reaching a compromise restructuring plan with its creditors.

As it stands, the bondholders would be given equity and new debt in exchange for its withdrawal of an alternative restructuring plan.

Another factor in recent market positivity has been news of the potential for hundreds of millions in tax savings tied to its wildfire prevention work.

Exela improves

Software name Exela’s issues marked the day with an improvement, traders said.

The 10% notes due 2023 tacked on 2 points to close at 47½ bid.

Early Wednesday, the Irving, Tex.-based business software developer announced that it had entered into a five-year accounts receivable securitization facility worth $160 million, Prospect News reported.

The facility may be extended and is incremental to the existing $100 million revolver maturing in July 2022 and has a lower cost of debt than its revolver.

“It’s a good first step to getting their debt down,” a trader said. “They were starting to look shaky in the back half of last year so this should bring some stabilization.”

Mallinckrodt gains

Elsewhere, in pharmaceuticals, Mallinckrodt’s paper continued to gain, market sources said.

The 5 5/8% senior notes due 2023 improved by 3 points to close at 40 bid. The 4 7/8% senior paper due 2020 picked up 3½ points to close at 79½ bid.

On Tuesday, the 4 7/8% notes garnered 2½ points.

Both tranches combined to see about $23 million trading by the close.

The Dublin-based drug producer’s structure continues to build on the positivity it received after touting its more than $1 billion debt reduction at a conference on Monday.

“That news hit the mainstream today, which renewed the focus on it,” a trader said. “I think it stays positive for the rest of the week.”

© 2015 Prospect News.
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