PHI notes fall as market increases scrutiny; California Resources issues lead energy names lower

By James McCandless

San Antonio, Nov. 13 – A short week in the distressed space started with an increased focus on energy names.

PHI, Inc.’s notes fell as the market sees less of a chance for the company to refinance its debt after a string of negativity.

The weakness spread to sector peer Bristow Group Inc.’s issues, combining with poor earnings results.

Elsewhere in energy, California Resources Corp. paper led the space downward as oil futures continued to trend negative.

The sector saw declines in Sanchez Energy Corp., Hornbeck Offshore Services, Inc. and Ensco plc’s issues.

Coal producer Cloud Peak Energy Inc.’s notes dropped as the company announced a strategic alternative review and a termination of its undrawn credit agreement.

In manufacturing, Adient, plc’s paper fell.

Chemical name Hexion Inc.’s notes also dropped.

PHI down

PHI’s notes declined at the start of the week, traders said.

The 5¼% notes due 2019 lost 2 points to close at 83¾ bid.

On Friday, the Lafayette, La.-based offshore air services name reported a loss of 73 cents per share and $168.8 million in revenue for the third quarter.

The notes were trading down Tuesday as the market became more skeptical that it would be able to refinance its debt before its 2019 maturity.

“They’ve got some runway to handle it, and they’ll probably end up with some kind of deal.” a trader said. “But a lot of people are starting to doubt their ability to get that done.”

PHI’s weakness spread to Bristow’s issues.

The 6¼% notes due 2022 dropped 8¾ points to close at 66½ bid.

The Houston-based peer reported a loss of 78 cents per share on Friday, missing analyst estimates of a 69 cents per share loss.

The company also announced the $560 million acquisition Columbia Helicopters, Inc.

“They’ve got to grow, but at the same time there’s a lot of weakness in this area,” a trader said. “It all depends on what the structure looks like after the deal’s completed.”

Energy lower

Meanwhile, California Resources’ bellwether paper traded down, market sources said.

The 8% paper due 2022 fell 2 points to close at 85¾ bid.

The Los Angeles-based independent oil and gas producer’s paper followed declines in crude oil futures, exemplifying a weak day in energy.

Houston-based peer Sanchez Energy’s 6 1/8% notes due 2023 slid 1½ points to close at 35½ bid.

Covington, La.-based offshore transportation name Hornbeck’s 5 7/8% notes due 2020 lost 2 points to close at 73½ bid.

London-based contract driller Ensco’s paper was also weak.

The 7¾% paper due 2026 dropped 3¾ points to close at 87¼ bid. The 5.2% paper due 2022 shed 2¾ points to close at 77¾ bid.

“Today was a bloodbath, especially in energy,” a trader said.

West Texas Intermediate crude oil futures were down $4.24 Tuesday to $55.69 per barrel at the end of trading, its lowest level in almost a year as concerns about oversupply worry traders. North Sea Brent crude oil futures lost $4.28, ending at $65.84 per barrel.

Cloud Peak loses

In the coal space, Cloud Peak’s notes fell, traders said.

The 12% notes due 2021 shaved off 3 points to close at 60 bid.

The Gillette, Wyo.-based coal producer was under pressure Tuesday amid chatter that the company would explore strategic alternatives, including a sale of the company.

At the close Tuesday, the company confirmed the talk and also announced that it would terminate its undrawn credit agreement with PNC Bank, Prospect News reported.

Adient negative

Away from energy, one of Adient’s issues saw a multi-point drop as one of the highest traded tranches of the day, market sources said.

The 4 7/8% notes due 2026 lost 5¾ points to close at 79½ bid.

“It’s not too surprising,” a trader said. “The negativity was just so heavy that a lot gets swept up.”

On Friday morning, the Dublin-based auto parts manufacturer reported a $1.30 per share profit for the third quarter, surpassing analyst predictions of $1.26 per share.

Hexion off

Hexion’s paper followed the market’s negative trend, traders said.

The 9% paper due 2020 fell ¾ point to close at 52¼ bid. The 6 5/8% paper due 2020 edged down ¼ point to close at 84½ bid.

The Columbus, Ohio-based chemical producer has been under pressure as second-lien noteholders prepare for debt talks, concerned that their position won’t guarantee them returns when $2.4 billion in debt matures in 2020.

© 2015 Prospect News.
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