McDermott improves; Bristow falls amid strategic alternatives review; Adient up

By James McCandless

San Antonio, April 16 – Oil-related names continued to take up a sizeable portion of distressed trading on Tuesday.

McDermott International, Inc.’s notes were moving higher after announcing a financially troubled project is ready for commissioning.

Elsewhere in oil services, Bristow Group Inc.’s issues fell after announcing a strategic alternatives review.

A gain in oil futures saw Ensco Rowan plc’s and Weatherford International plc’s paper follow suit while Halcon Resources Corp.’s notes were active but level.

In manufacturing, Adient plc’s notes improved a day after starting $1.5 billion in new debt financing.

Meanwhile, Dean Foods Co.’s paper continued to sink amid market speculation of a buyout.

Telecom names DISH Network Corp.’s notes were down while Frontier Communications Corp.’s issues were pushed upward.

McDermott higher

McDermott’s notes were moving higher in the Tuesday session, traders said.

The 10 5/8% notes due 2024 gained 2 points to close at 90½ bid.

By the end of the afternoon, $69 million of the bonds were on the tape.

Late Monday, the Houston-based oil and gas engineering company announced that the first stage of a liquid natural gas facility in Louisiana is ready to be commissioned.

The name’s structure came under pressure in February after it reported that the project had experienced cost overruns that resulted in a $168 million charge for the fourth-quarter.

Bristow falls

Elsewhere in the oil services space, Bristow’s issues were falling, market sources said.

The 6¼% notes due 2022 shaved off 4 points to close at 12 bid.

The Houston-based offshore transportation name announced a strategic alternatives review late Monday.

It also announced that it would not be making a $12.5 million interest payment on the 6¼% notes, entering a 30-day grace period.

“The most likely outcome is bankruptcy,” a trader said.

In response, S&P Global Ratings downgraded the name to D from CCC-.

S&P had previously downgraded the company last week after obtaining debt waivers from a number of creditors.

Oil better

Gaining oil futures led to mostly positive movement for distressed oil names, traders said.

London-based contract driller Ensco Rowan’s paper was positive.

The 7¾% paper due 2026 saw a 3-point boost to close at 89 bid. The 5.2% paper due 2025 inched up ¼ point to close at 80 bid.

Baar, Switzerland-based oilfield services provider Weatherford’s notes were gaining.

The 8¼% notes due 2023 added ¾ point to close at 68 bid. The 9 7/8% notes due 2024 rose ½ point to close at 68½ bid.

Houston-based independent oil and gas producer Halcon’s issues were active but flat.

The 6¾% notes due 2025 held level at 67 bid.

West Texas Intermediate crude oil futures for May delivery rose 65 cents to close the session at $64.05 per barrel.

North Sea Brent crude oil futures for June delivery finished the day at $71.72 per barrel after a 54-cent gain.

Adient up

Elsewhere, in manufacturing, Adient’s paper was seen improving, market sources said.

The 4 7/8% paper due 2026 rose 1¾ points to close at 82 bid.

The Dublin-based car seat producer started $1.5 billion in new debt offerings on Monday.

The financing consisted of two parts: a $750 million new five-year covenant-lite term loan B and $750 million of senior secured notes due 2026.

The company expects to use the proceeds to refinance existing credit facilities.

It also released preliminary results for the second quarter, expecting revenues to land at $4.1 billion.

Dean Foods sinks

Meanwhile, Dean Foods’ notes sank in Tuesday’s activity, traders said.

The 6½% notes due 2023 fell 1¾ points to close at 58¾ bid.

The market was abuzz with speculation on Monday that the Dallas-based dairy product manufacturer was the subject of a potential buyout from Montreal-based sector peer Saputo.

“That talk has died down a little,” a trader said. “But it’s still generating interest in the name.”

The company has been exploring financial alternatives since reporting falling sales in its fourth-quarter earnings report, including a search to find a buyer.

DISH down, Frontier gains

In the telecom space, DISH’s issues were on a downward trend, market sources said.

The 5 7/8% notes due 2024 dropped ½ point to close at 87½ bid.

“There wasn’t any news moving it today,” a trader said. “There’s just a lot of interest in the sector.”

Norwalk-based wireline communications name Frontier’s paper was pushed upward.

The 10½% paper due 2022 tacked on 1¼ points to close at 75 bid. The 11% paper due 2025 picked up ¾ point to close at 65¾ bid.

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