PG&E notes rise, probe clears utility of 2017 fire; PDVSA down on increased attention

By James McCandless

San Antonio, Jan. 24 – The distressed space was in a holding pattern Thursday, characterized that way by traders, as the market awaits quarterly earnings results.

PG&E Corp.’s notes saw a boost after the company was cleared of any liability in a 2017 wildfire by California investigators.

Elsewhere in utilities, FirstEnergy Solutions Corp., a subsidiary of FirstEnergy Corp., saw its issues end mixed a day after reaching a restructuring deal with bondholders.

Petroleos de Venezuela SA’s paper was down as the market’s attention focused on the company amid the political turmoil in Venezuela.

Meanwhile, Ensco plc’s notes were being pushed lower after the company postponed finalizing a merger with a sector peer so both sides could review new terms.

As oil futures traded in mixed directions, similar activity emerged for California Resources Corp.’s, Sanchez Energy Corp.’s and Hornbeck Offshore Services Inc.’s issues.

Aerospace manufacturer Triumph Group, Inc.’s paper was on the rise after news broke that it had sold its jet wing-making segment to Bombardier.

Retailer Neiman Marcus Group, Inc.’s notes continued their positive trend.

PG&E rises, FirstEnergy level

The Thursday session saw PG&E’s notes improve, traders said.

The 6.05% notes due 2034 jumped 5 points to close at 87 bid. The 3½% notes due 2020 added 5 points to close at 85 bid.

The San Francisco-based electric utility’s notes, like its common stock, saw a boost on Thursday after being cleared of responsibility for the 2017 Tubbs Fire.

The findings may reduce the company’s upcoming liabilities for recent wildfires by about $17 billion, according to California governor Gavin Newsom.

The company is slated to file for bankruptcy by the end of the month.

“It’s nothing to sneeze at,” a trader said. “It could have implications on a wide range of things, including their bankruptcy timeline.”

Elsewhere in the utilities space, FirstEnergy Solutions, a subsidiary of Akron, Ohio-based utility FirstEnergy, saw its issues close the day nearly level.

The 6.85% notes due 2034 rose ¾ point to close at 75¾ bid. The 6.05% notes due 2021 were level at 76½ bid.

On Wednesday, the company announced that it had reached a settlement with its bondholders to exit Chapter 11 bankruptcy.

PDVSA mixed

Meanwhile, in the oil and gas sector, PDVSA’s paper was mixed, market sources said.

The 5½% paper due 2037 fell 1 point to close at 24¾ bid. The 6% paper due 2026 shaved off 1¾ points to close at 23¾ bid.

The Caracas, Venezuela-based oil and gas producer’s paper continued to be a fixture in the distressed space as creditors try to recoup missed payments.

That, coupled with increased political unrest in the country, has kept the company’s structure actively trading this week.

Ensco lower

Ensco’s notes were moving lower, traders said.

The 3% notes due 2024, moving as low as 74½ bid throughout Thursday, ended level at 76¼ bid.

Late Wednesday, the London-based contract driller announced that it had adjourned a general meeting scheduled to give approval to its proposed merger with sector peer Rowan Cos., plc.

The company originally announced the merger in October and revised the terms of the agreement in January; both companies stated they would need more time to look over the new terms.

Oil names mixed

A day of mixed activity in oil futures led to similar movement in popular distressed oil names, market sources said.

Los Angeles-based independent oil and gas producer California Resources’ issues were mixed, but nearly level.

The 6% notes due 2024 were level at 70 bid. The 8% notes due 2022 added ¼ point to close at 79¾ bid.

Houston-based sector peer Sanchez Energy’s paper saw a decline.

The 6 1/8% paper due 2023 shaved off ½ point to close at 22½ bid.

Covington, La.-based offshore transportation name Hornbeck’s notes were also mixed.

The 5% notes due 2021 dropped 2½ points to close at 46½ bid. The 5 7/8% notes due 2020 gained 4¼ points to close at 64¼ bid.

West Texas Intermediate crude oil futures for March delivery closed the Thursday session at $53.13 per barrel after a 51-cent rise.

North Sea Brent crude futures lost 5 cents to close out at $61.09 per barrel.

Triumph gains

Meanwhile, Triumph Group’s issues ended better, market sources said.

The 4 7/8% notes due 2021 picked up 3¾ points to close at 92¼ bid. The 5¼% notes due 2022 rose 2½ points to close at 86¾ bid.

On Thursday, the Berwyn, Penn.-based aerospace name announced that it would be selling its wing manufacturing unit to sector peer Bombardier for what the company describes as “a nominal cash consideration.”

Neiman Marcus up

In the retail sector, Neiman Marcus’ paper was trending positive.

The 8% paper due 2021 picked up 1½ points to close at 41 bid.

The Dallas-based retailer is currently involved in a legal fight with its creditors over a recent private equity transfer of e-commerce segment MyTheresa.

“Nothing’s happened in a while, but it still continues to trade a lot,” a trader said.

© 2015 Prospect News.
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