Intelsat dips as revenue legislation proposed; PG&E notes better after stock upgrade

By James McCandless

San Antonio, Jan. 28 – The distressed debt session put negative focus on shifting ground in the telecom space in an otherwise positive day.

Intelsat SA’s notes dipped after news broke of a U.S. Senate proposal to limit satellite companies’ revenues in a potential C-band spectrum auction.

Sector peer Frontier Communications Corp.’s issues diverged by the close.

Utilities name PG&E Corp.’s paper ended the session in a better position after receiving an analyst upgrade.

Meanwhile, in oil and gas, Superior Energy Services, Inc.’s notes improved after announcing that it and creditors agreed to amend terms to an exchange offer.

Oil futures gains begot similar boosts for California Resources Corp.’s, Antero Resources Corp.’s and Southwestern Energy Co.’s issues.

Auto parts maker Tenneco Inc.’s paper bounced higher a day after providing an update on its strategic alternatives review.

Elsewhere, in retail, Rite Aid Corp.’s notes continued to track higher as it works through an exchange offer.

Intelsat dips

Intelsat’s notes dipped by the end of the Tuesday session, traders said.

Intelsat Jackson Holdings SA’s 9¾% senior notes due 2025 lost 1½ points to close at 89 bid. Intelsat (Luxembourg) SA’s 8 1/8% senior due 2023 dived 4¾ points to close at 51½ bid.

The two tranches combined to see about $61 million on the tape at the end of the session.

On Tuesday, the Luxembourg-based satellite operator’s structure came under pressure after news broke that a bipartisan group of U.S. Senators have proposed legislation that would limit the potential revenue gained from a C-band spectrum auction.

As part of the C-Band Alliance, satellite names have estimated that such an auction could generate as much as $77 billion.

The legislation calls for the setup of a $6 billion fund for expenses related to relocating off of related frequencies.

It also would earmark $5 billion for deficit reduction and the rest for improving 911 services and rural broadband connections.

“It increases the likelihood that the FCC will set disagreeable auction terms,” a trader said. “At every point, they’ve lost out on more potential revenue.”

The Federal Communications Commission has been responsible for setting the parameters for a C-band auction since the end of 2019, when legislators failed to come to an agreement on terms.

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

The 10½% senior notes due 2022 improved by ¼ point to close at 44¾ bid. The 11% senior notes due 2025 shed ½ point to close at 44½ bid.

PG&E better

Utilities name PG&E’s paper finished in a better position, market sources said.

The 6.05% bonds due 2034 were lifted 1½ points to close at 115½ bid.

Almost a week after the San Francisco-based bankrupt electric utility smoothed out a deal with creditors to support its restructuring deal, the company received an analyst upgrade on its common stock.

In a note, an analyst at Mizuho upgraded the stock to buy from neutral, citing an easier path to an emergence from bankruptcy now that its major creditors support the plan.

The analyst argued that decreased risk of exposure to wildfire costs and a vested interest from the state government to complete the process made for a rosier outlook.

After ironing out disputes over payments and its debt structure, the two parties agreed to terms last Thursday but still require governor Gavin Newsom’s approval.

Superior Energy adds

Meanwhile, in oil and gas, Superior Energy’s notes improved, traders said.

The 7 1/8% senior notes due 2021 jumped up 5½ points to close at 87¾ bid. The 7¾% senior notes due 2024 tacked on 3 points to close at 64 bid.

The gains in the Houston-based oilfield services provider’s structure came after the company announced that subsidiary SESI, LLC and holders of its $800 million outstanding 2021 notes reached an agreement to amend some terms of the exchange offer for the notes.

Aspects of the amended agreement include a 10-day extension of the exchange, a requirement for a valid tender of at least $635 million of the original notes and increases to interest rates in several tranches.

The original exchange offer commenced on Jan. 6.

Oil gains

Gains for oil futures led to positive performances from distressed energy names, market sources said.

West Texas Intermediate crude oil futures for March delivery rose 34 cents to settle at $53.48 per barrel.

North Sea Brent crude oil futures for March delivery ended the session at $59.51 after a 19 cent addition.

Los Angeles-based independent oil and gas producer California Resources’ issues saw a boost.

The 6% senior notes due 2024 rose ¼ point to close at 31¼ bid. The 8% senior secured notes due 2022 added 1 point to close at 36 bid.

Denver-based producer Antero Resources’ paper followed the sector upward.

The 5 5/8% senior notes due 2023 shot up 4¾ points to close at 75¼ bid. The 5% senior paper due 2025 rose 3 points to close at 69½ bid.

Spring, Tex.-based sector peer Southwestern Energy’s notes saw movement.

The 7¾% senior notes due 2027 garnered 3 points to close at 85½ bid.

Tenneco higher

Auto parts maker Tenneco’s issues finished in a higher position, traders said.

The 5% senior notes due 2026 picked up 3¾ points to close at 91½ bid.

The Lake Forest, Ill.-based auto parts manufacturer’s issues saw a positive shift a day after announcing that, as part of its ongoing strategic alternatives review, the company has hired Lazard as an independent financial adviser.

At the forefront of the review, according to the name, is analyzing Tenneco’s current plan to spin off its aftermarket and ride performance arm.

Concurrently, the company also said that it had raised its 2019 revenue outlook to $17.35 billion from $17.25 billion.

Rite Aid up

Elsewhere, in the retail space, Rite Aid’s paper ended at better levels, market sources said.

The 6 1/8% senior notes due 2023 inched up ¼ point to close at 91¾ bid.

In the midst of an exchange offer, the Camp Hill, Pa.-based drug store name’s paper has received heightened attention.

Last week, Fitch Ratings issued a ratings downgrade as the company seeks to exchange more than $1 billion of the 2023 notes for new 7½% senior secured notes due 2025.

As of the last update, the company said that $1,633,938,000 of the 2023 notes had been tendered.

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