PG&E gains after filing updated restructuring plan; WeWork rises as new CEO named

By James McCandless

San Antonio, Feb. 3 – The beginning of the week in the distressed debt market saw strength from volume leaders.

PG&E Corp.’s notes gained after the company filed an updated restructuring plan that it hopes wins the approval of California governor Gavin Newsom.

Real estate startup WeWork Cos. Inc.’s issues were on the rise as the company appoints a new chief executive officer.

Meanwhile, in the telecom space, Intelsat SA’s paper gained ground as the company prepares for a C-band spectrum auction.

Sector peer Frontier Communications Corp.’s issues improved.

Manufacturer United States Steel Corp.’s paper diverged in the wake of an earnings report that beat expectations.

In the retail space, L Brands, Inc.’s notes were under water amid reports of a potential executive departure and asset sale.

As oil futures were pushed lower, EQT Corp.’s, Diamond Offshore Drilling, Inc.’s and California Resources Corp.’s issues also slid.

PG&E gains

PG&E’s notes spent the day gaining to open up the week, traders said.

The 6.05% notes due 2034 improved by 1 point to close at 116 bid.

Late Friday, the San Francisco-based bankrupt electric utility announced that it had submitted a reworked restructuring plan in bankruptcy court.

The amended plan calls for a reconfiguration of its board of directors, staffing it with safety experts and mandating that half of the members live in California.

While the company submitted the changes in order to win the approval of California governor Newsom, the plan lacks a provision for a state takeover.

Newsom has been pushing for the provision as part of his list of prerequisites for approval.

Last week, as the utility touted its increased creditor support for its plan, Newsom said that a state takeover is still on the table.

On Monday, a state senator filed a bill giving the governor a framework for such a move.

WeWork rises

Real estate name WeWork’s issues were on the rise, market sources said.

The 7 7/8% senior notes due 2025 rose ½ point to close at 77¾ bid.

Over the weekend, news broke that the New York-based coworking startup has appointed real estate executive Sandeep Mathrani as its CEO.

Mathrani is the company’s first permanent chief executive since September, when Adam Neumann resigned after a mishandled valuation caused the company to backpedal on an initial public offering.

In the aftermath, large investor SoftBank stepped in with a rescue financing package and a plan for profitability within five years.

“They are going to spend the next few years trying to convince people that they are a serious company with a solid business,” a trader said. “That was hard to do with Neumann in charge.”

Intelsat, Frontier gain

Meanwhile, in the telecom space, Intelsat’s paper gained ground, traders said.

The 9½% senior notes due 2023 jumped up 3 points to close at 57½ bid. Intelsat Jackson Holdings SA’s 8½% senior paper due 2024 picked up 1½ points to close at 86¼ bid.

About $88 million of the notes changed hands by the end of the session.

Last week, the Luxembourg-based satellite operator saw heightened scrutiny as the Federal Communications Commission prepares to set the terms for a C-band spectrum auction.

Despite lobbying efforts from the company and others as part of the C-Band Alliance over the last year, the potential pot of revenue that would be allocated to satellite names has been culled at every turn.

Legislation in the U.S. Senate would seek to cap the total payout to operators at $5 billion collectively.

“For months, they had been betting that this would help them with their debt pile,” a trader said. “Now it seems like it could make a dent but not clear it all up.”

Norwalk, Conn.-based wireline communications name Frontier’s notes improved.

The 10½% senior notes due 2022 garnered ¾ point to close at 46½ bid. The 11% senior notes due 2025 rose ¾ point to close at 46½ bid.

U.S. Steel diverges

Manufacturer U.S. Steel’s issues diverged on Monday, market sources said.

The 6 7/8% senior notes due 2025 shifted up 1¼ points to close at 91½ bid. The 6¼% senior notes due 2026 shaved off ½ point to close at 85½ bid.

The Pittsburgh-based steelmaker’s issues have seen more attention after reporting fourth-quarter earnings on Thursday.

The company posted a 64 cents per share loss, better than the $1.14 per share loss that analysts had expected.

Revenues were pegged at $2.82 billion.

L Brands down

In the retail space, L Brands’ paper was under water, traders said.

The 6¾% senior notes due 2036 dropped 1¾ points to close at 97¾ bid. The 5¼% senior notes due 2028 shed ¼ point to close at 98½.

Over the last week, amid reports that CEO Leslie Wexner is in talks to depart the company and amid talk that the company might sell its Victoria’s Secret brand, the Columbus, Ohio-based retail name’s paper has seen a positive trend.

As the company has shown consistent decreases in comparable-store sales quarter by quarter, investors have advocated for the sale in order to focus on other segments.

There has also been a push to spin off the retailer’s Bath & Body Works arm.

Oil moves lower

Oil futures were pushed lower, mirrored by distressed energy tranches, market sources said.

Futures dipped as the coronavirus suppressed Chinese energy demand.

West Texas Intermediate crude oil futures for March delivery lost $1.45 to settle at $50.11 per barrel.

North Sea Brent crude oil futures for April delivery finished at $54.45 per barrel after a $2.17 slide.

Pittsburgh-based independent oil and gas producer EQT’s notes slid.

The 6 1/8% senior notes due 2025 fell ½ point to close at 90¼ bid.

Houston-based contract driller Diamond Offshore’s issues followed the sector trend.

The 7 7/8% senior notes due 2025 dipped ½ point to close at 80½ bid.

Los Angeles-based producer California Resources’ paper was trailing.

The 6% senior notes due 2024 were docked 2 points to close at 25 bid. The 8% senior secured paper due 2022 shaved off ½ point to close at 33½ bid.

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