PG&E notes trade better amid creditor negotiations; Intelsat improves in telecom space

By James McCandless

San Antonio, Jan. 16 – Newsmakers in the utilities and telecom sectors continued to drive activity in the back half of the week.

PG&E Corp.’s notes were better amid ongoing negotiations with creditors and a legal fight over fire safety compliance.

Meanwhile, in telecom, Intelsat SA’s issues were seen improving as it urges the Federal Communications Commission to quickly transition to 5G.

Telecom-related REIT Uniti Group Inc.’s paper dropped.

Drug producer Endo International plc’s notes varied, continuing to trade off of news that it reached a settlement with Oklahoma over opioid-related claims.

Sector peer Mallinckrodt plc’s issues gained ground.

Oil futures rose, mirrored in the movements of California Resources Corp.’s and Chesapeake Energy Corp.’s paper while Whiting Petroleum Corp.’s notes diverged.

Retailer Bed Bath & Beyond Inc.’s issues were mixed against the backdrop of a volatile retail space.

PG&E better

PG&E’s notes were better as the session came to a close, traders said.

The 6.05% notes due 2034 rose ¾ point to close at 114½ bid.

In federal court on Wednesday, the San Francisco-based bankrupt electric utility told a judge that it is just shy of complying with its probationary requirements for wildfire prevention.

The company said that it had not met commitments it made under a recent safety plan to inspect and repair power lines, clear debris near power lines and cut tree branches that may interfere with those lines.

The company blamed circumstances beyond its control.

Despite this, its notes saw a fifth straight day of positivity as PG&E continues negotiations with creditors over a compromise restructuring plan.

Intelsat up, Uniti drops

Meanwhile, in the telecom space, Intelsat’s issues improved, market sources said.

Intelsat Luxembourg SA’s 8 1/8% senior notes due 2023 improved by ¾ point to close at 63 bid. The 9½% senior notes due 2023 picked up 1 point to close at 73½ bid.

The Luxembourg-based satellite operator is waiting for the FCC to set the parameters for a C-band spectrum auction after months of lobbying as part of the C-Band Alliance.

The group said in a filing with the regulator on Tuesday that continued delays in transitioning to 5G usage for C-band spectrum would adversely impact economic growth, estimating a loss of up to $50 billion in consumer surplus.

“What they primarily want to hear about is how any revenues from the auction will be distributed,” a trader said. “Every step of the way has been challenging in getting a clear picture on that.”

Little Rock, Ark.-based telecom-related real estate investment trust Uniti Group’s paper dropped.

The 8¼% senior notes due 2023 shed 2½ points to close at 85¼ bid. The 7 1/8% senior paper due 2024 lost 2¾ points to close at 82¾ bid.

Mallinckrodt gains

Drug producer Endo’s notes varied in direction, traders said.

The 6% senior notes due 2025 held level at 73¾ bid. The 6% senior notes due 2023 added ½ point to close at 80 bid.

This week, the Dublin-based generic pharmaceuticals maker’s structure has seen generally positive trading after last Friday’s announcement that it had reached an $8.75 million settlement with the state of Oklahoma over claims that it allegedly had a hand in propagating the opioid epidemic.

Terms of the agreement included a ban on the company hiring representatives in the state, a ban on promotional materials, and no admission of wrongdoing.

Dublin-based sector peer Mallinckrodt’s issues gained ground.

The 5¾% senior notes due 2022 improved by 3 points to close at 47½ bid. The 4 7/8% senior notes due 2020 garnered 1 point to close at 80½ bid.

Oil rises

Oil futures saw a rise, mirrored by distressed energy tranches, market sources said.

Futures were better, carried by optimism stemming from a preliminary trade deal signing between the United States and China.

West Texas Intermediate crude oil futures for February delivery shifted up 71 cents to settle at $58.52 per barrel.

North Sea Brent crude oil futures for March delivery finished at $64.62 per barrel following a 62 cent pickup.

Los Angeles-based independent oil and gas producer California Resources’ paper was lifted.

The 6% senior paper due 2024 tacked on 2¾ points to close at 36¾ bid. The 8% senior secured paper due 2022 gained 1 point to close at 42¾ bid.

Oklahoma City-based producer Chesapeake Energy’s notes followed the trend.

The 8% senior notes due 2025 added ¾ point to close at 60¼ bid. The 8% senior notes due 2027 improved by ¾ point to close at 60¼ bid.

Denver-based peer Whiting Petroleum’s issues diverged.

The 6¼% senior notes due 2023 shaved off ¼ point to close at 85 bid. The 6 5/8% senior notes due 2026 shifted up 2 points to close at 67½ bid.

Bed Bath mixed

Retailer Bed Bath & Beyond’s long-term paper saw mixed movements, traders said.

The 5.165% senior notes due 2044 lost 1½ points to close at 72¾ bid. The 4.915% senior paper due 2034 bounced up 1¼ points to close at 77 bid.

Last week, the Union, N.J.-based retail chain came under pressure after it reported third-quarter earnings, underperforming expectations.

The company reported a loss of 38 cents per share, well below analysts’ predictions of a 3 cents per share profit.

It also reported a 9% reduction in net sales.

“A lot of brick-and-mortar retail names reported numbers similar to theirs,” a trader said.

© 2015 Prospect News.
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