PG&E steers clear of distressed; China Evergrande, Sunac decline; Transocean, PBF up

By Cristal Cody

Tupelo, Miss., Sept. 27 – PG&E Corp.’s bonds saw thin trading and few hits on Friday and Monday following the announcement the previously bankrupt power provider was charged with crimes in connection with a 2020 California wildfire.

PG&E’s 5% senior secured notes due July 2028 (B1/BB-/BB) were up about ¼ point on Monday at just under the 102 bid area after closing Friday less than ¼ point weaker, according to a market source.

“We haven’t seen much trading,” one source said. “They’re still strictly IG on the credit side, but it’s one the whole distressed community is familiar with. The stock has rallied a decent amount since August. The bonds are fine, or at least, not down a lot.”

PG&E issued the secured notes along with a term loan, while subsidiary Pacific Gas & Electric Co. priced $8.9 billion of investment-grade first mortgage bonds (Baa3/BBB-/BBB-) to finance its July 2, 2020 Chapter 11 bankruptcy exit.

The company pleaded guilty in 2020 to 84 counts of involuntary manslaughter resulting from 2018 northern California wildfires.

PG&E disputed the latest charges in a statement on Friday. The San Francisco-based electric and natural gas utility company reports third-quarter earnings on Nov. 1.

The stock closed Monday up 4 cents at $9.98, compared to its 52-week low of $8.24 and 52-week high of $12.91.

Evergrande, Sunac down

China Evergrande Group’s bonds declined further on Monday as the company enters a 30-day grace period following missed debt payments due last week, sources said.

Evergrande’s 8¾% senior notes due 2025 (C/C/C) fell 1 5/8 points to 25 1/8 bid on $9 million of secondary volume.

The notes shed nearly 3½ points on Friday.

The Shenzhen, China-based real estate developer’s notes traded as low as 23¾ bid in the sell-off last week.

Elsewhere in the space, Sunac China Holdings Ltd.’s dollar bonds fell about 2 points to 6 points after declining nearly 3½ points to 5¼ points on Friday, a source said.

The Tianjin, China-based property developer’s 7% senior secured notes due 2025 (B1/BB-) dropped about 6 points to head out Monday at 81¼ bid. On Friday, the notes traded over 4 points weaker.

Energy names higher

Distressed index returns were soft on Friday but continued to recover month to date.

The S&P U.S. High Yield Corporate Distressed Bond index total return was 0.23% on Friday, compared to 0.33% on Thursday, 0.41% on Wednesday, 0.51% on Tuesday and minus 1% on Sept. 20.

Month-to-date total returns grew to 1.66% as the week closed versus 1.42% on Thursday, 1.09% on Wednesday, 0.67% on Tuesday and 0.16% at the start of the prior week.

Year-to-date total returns improved to 28.79% on Friday from 28.49% on Thursday, 28.06% on Wednesday, 27.54% on Tuesday and 26.89% at the week’s start.

Market tone was mixed on Monday as lawmakers rushed to avert a U.S. government budget shutdown later in the week.

The iShares iBoxx High Yield Corporate Bond ETF declined 6 cents to end the day at $87.85.

Oil prices climbed more than $1.

Brent crude futures for November deliveries rose $1.44 to settle Monday at $79.53 a barrel.

Offshore driller Transocean Inc.’s 7½% senior notes due 2026 (Ca/CCC+) gained about 2½ points by the close to head out at 79½ bid, a source said.

Transocean’s 7½% senior notes due 2031 (Ca/CCC) added nearly 2¾ points to hit 64¼ bid on more than $7 million of volume.

The Vernier, Switzerland-based company’s 11½ senior guaranteed notes due 2027 (Caa3/CCC+) traded about ½ point stronger at 101 bid.

Petroleum refiner PBF Holding Co. LLC’s paper also climbed in active trading on Monday.

The 6% senior notes due 2028 (Caa1/B/B+) rose almost 2 points to 65¼ bid on over $5 million of activity, a source said.

The Parsippany, N.J.-based issuer’s notes last traded Friday ½ point better at 63½ bid.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.