PG&E notes rise after restructure approval; American Airlines up in travel space

By James McCandless

San Antonio, June 22 – As the new week kicked off, the distressed market was focused on the utilities and travel sectors.

PG&E Corp.’s notes were on the rise after receiving court approval for its restructuring plan late last week.

Meanwhile, in the travel space, American Airlines Group Inc.’s issues improved as the company plans to issue billions more in financing.

Sector peer United Airlines Holdings, Inc.’s paper trailed off.

In oil and gas, SM Energy Co.’s notes varied in direction after receiving a ratings downgrade during the session.

Improvements for oil futures served as the backdrop for Occidental Petroleum Corp.’s and Antero Resources Corp.’s varied movement as Whiting Petroleum Corp.’s paper dipped.

Elsewhere, auto parts name Tenneco Inc.’s notes were under pressure after receiving its own ratings cut.

Car rental company Hertz Global Holdings, Inc.’s issues had mixed results following a tumultuous week regarding a proposed common stock offering.

PG&E rises

PG&E’s notes were on the rise throughout Monday activity, traders said.

The 6.05% senior notes due 2034 rose ½ point to close at 121½ bid.

On Saturday, the San Francisco-based utilities provider said that its Chapter 11 plan of reorganization was approved in bankruptcy court, Prospect News reported.

After the plan gained approval from California regulators at the end of May, the judge said at the beginning of last week that he would also give the company the go-ahead.

After it emerges from the process in July, all wildfire settlements provided for in the plan of reorganization will be implemented, including the immediate funding of the fire victim trust based on claims.

Raising money for its exit, the name recently priced $2 billion in senior secured notes in two tranches.

“Those bonds made some noise today,” a trader said. “I think a lot of people look at this and think that despite all the complexity of the case, there’s been quite a lot of risk reduction.”

After the close, PG&E announced the launch of a sale of common stock and equity units in hopes to raise a collective $5.23 billion.

AA up, United off

Meanwhile, in the air travel space, American Airlines’ issues improved, market sources said.

The 5% senior notes due 2022 grabbed 4¾ points to close at 71 bid. The 3¾% senior notes due 2025 picked up 2¾ points to close at 59¼ bid.

Over the weekend, news broke that the Fort Worth-based air travel name would seek $3.5 billion in new financing.

Offerings of $750 million in five-year convertible notes, $500 million from a four-year senior secured term loan B and $1.5 billion of five-year senior secured bullet notes are part of the package.

Earlier in the month, the company took $5 billion in federal emergency loans backed against its loyalty program.

Recently, the sector has seen positive sentiment from the market after getting an uptick in bookings and projecting an increased number in travelers heading into the summer.

Chicago-based sector peer United Airlines’ paper tapered off to negative territory.

The 5% senior paper due 2024 shaved off ½ point to close at 86½ bid. The 4¼% senior paper due 2022 fell ½ point to close at 89½ bid.

SM Energy varies

In oil and gas, SM Energy’s notes varied in direction, traders said.

The 5% senior notes due 2024 declined by 2¼ points to close at 54¾ bid. The 6 5/8% senior notes due 2027 garnered ¾ point to close at 51¾ bid.

On Monday, the Denver-based independent oil and gas producer received a slate of downgrades from Fitch Ratings.

The agency lowered the company’s issuer default rating and revolving credit facility while propping up several issue-level ratings.

Fitch defined the company’s recently completed exchange of senior unsecured notes for new second-lien secured notes as a distressed exchange, according to its criteria.

Oil names diverge

Improvements for oil futures served as the backdrop for diverging energy tranches, market sources said.

West Texas Intermediate crude oil futures for August delivery tacked on 90 cents to settle at $40.46 per barrel.

North Sea Brent crude oil futures for August delivery finished the session at $43.08 after an 89 cent gain.

Houston-based producer Occidental Petroleum’s issues were flat and ticked up slightly.

The 2.9% senior notes due 2024 held level at 88 bid. The 2.7% senior notes due 2022 moved up 1 point to close at 94½ bid.

Two tranches from Denver-based producer Antero Resources moved independently of one another.

The 6 5/8% senior paper due 2023 shot up 1½ points to close at 67 bid. The 5% senior paper due 2025 shed ½ point to close at 63½ bid.

Whiting Petroleum, another Denver-based peer, saw its notes dip.

The 6¼% senior notes due 2023 chalked off ½ point to close at 16 bid. The 6 5/8% senior notes due 2026 was docked 1 point to close at 16 bid.

Tenneco under

Elsewhere, automotive name Tenneco’s issues were under pressure, traders said.

The 5% senior notes due 2026 dipped 1¾ points to close at 70¾ bid. The 5 3/8% senior notes due 2024 dived 6½ points to close at 70½ bid.

Late Friday, the Lake Forest, Ill.-based auto parts manufacturer received its own downgrades from Moody’s Investors Service.

Moody’s slashed the company’s corporate family rating, probability of default rating and senior unsecured debt rating.

The agency cited its belief that the name will experience weak credit metrics through the second half of 2021, though recent covenant relief under its facilities was marked as an upside.

Hertz mixed

Car renter Hertz’s paper saw mixed results at the session’s end, market sources said.

The 6¼% senior notes due 2022 rose 4 points to close at 28 bid. The 5½% senior notes due 2024 lost 2½ points to close at 29 bid.

The mixed results in the Estero, Fla.-based car rental name’s structure were based on high volume after a week of turmoil centered on a proposed $500 million common stock offering.

After seeing heightened interest from retail investors, the company proposed the offering and shelved it within a week after federal regulators became involved.

The Securities and Exchange Commission’s chairman said that the body had “comments” on the offering, prompting the name to suspend the move.

© 2015 Prospect News.
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