Deutsche Bank notes rise on potential merger; Consolidated Communications issues lower after downgrade

By James McCandless

San Antonio, March 11 – Distressed trading started a new week with modest trading and no clear focus following the end of the bulk of earnings season.

Deutsche Bank AG’s notes were on the rise Monday after news broke that it had agreed to preliminary talks to merge with a competitor.

Elsewhere, Consolidated Communications Holdings Inc.’s issues declined following a ratings downgrade late Friday.

Sector peer Intelsat SA’s paper was mixed, coming off of a week of negative attention.

PG&E Corp.’s notes were negative amid reports of potential changes to California’s utility regulator.

A rise in oil futures led to similar movement for Chaparral Energy, Inc. and Alta Mesa Resources, Inc.’s issues while California Resources Corp.’s paper ended mixed.

Meanwhile, Ferrellgas Partners LP’s notes also closed mixed one trading day after releasing its latest earnings report.

Rite Aid Corp.’s issues dipped amid continuing turmoil in retail.

Deutsche Bank up

Deutsche Bank’s notes were rising in Monday’s session, traders said.

The 4 7/8% notes due 2032 added 1 point to close at 85¼ bid.

Early Monday, news broke that the Frankfurt-based financial services company’s executives had agreed to hold preliminary talks for a potential merger with competitor Commerzbank.

Its structure has been under pressure after a string of negative headlines, including its recent involvement with a money-laundering probe that culminated in German authorities raiding the bank’s headquarters.

“They’ve really fallen off in the last six months,” a trader said. “This merger might be what gives them a jump.”

Consolidated down, Intelsat mixed

Elsewhere, Consolidated Communications’ issues were in decline, market sources said.

The 6½% notes due 2022 dropped 2½ points to close at 89½ bid.

Late Friday, S&P Global Ratings issued a downgrade for each of the Mattoon, Ill.-based telecom name’s ratings, including its issuer credit rating.

The agency attributed the downgrades to the company’s declining revenues, resulting in an adjusted leverage above 5x for the next few years.

Luxembourg-based sector peer Intelsat’s paper was mixed.

Intelsat Jackson Holdings SA’s 5½% paper due 2023 gained ½ point to close at 91 bid. Intelsat (Luxembourg) SA’s 8 1/8% notes due 2023 shaved off ¾ point to close at 76 bid.

Last week, the company faced pressure after a string of negative headlines concerning the C-band spectrum, among them that U.S. lawmakers had soured on allowing companies to open it up to mobile phone network providers.

The prospect of doing so could open a new revenue stream for Intelsat and others who operate the spectrum.

PG&E negative

Meanwhile, PG&E’s notes were moving in a negative direction, traders said.

The 6.05% notes due 2034 shaved off ¾ point to close at 91¾ bid.

The San Francisco-based bankrupt electric utility is facing shifting winds over what regulations should be put in place over it and its industry to prevent future wildfires.

Ratings agencies have told California lawmakers that PG&E and other state utilities could receive downgrades at the beginning of wildfire season if legislative reforms aren’t enacted.

The company is facing calls to fix its safety protocols to focus on preventative measures around its assets.

Oil trends higher

Gains for oil futures pushed several energy tranches higher, market sources said.

Oklahoma City-based independent oil and gas producer Chaparral Energy’s issues climbed.

The 8¾% notes due 2023 rose 1 point to close at 59¾ bid.

Houston-based sector peer Alta Mesa’s paper was also trending positively.

The 7 7/8% paper due 2024 picked up 1 point to close at 41 bid.

Los Angeles-based producer California Resources’ notes closed mixed.

The 6% notes due 2024 lost ¾ point to close at 68 bid. The 8% notes due 2022 tacked on ½ point to close at 74¾ bid.

Monday’s close saw West Texas Intermediate crude oil futures for April delivery at $56.79 per barrel after a 72 cent rise.

North Sea Brent crude oil futures for May delivery added 84 cents to end the session at $66.58 per barrel.

Ferrellgas mixed

Elsewhere in energy, Ferrellgas’ issues were mixed, traders said.

The 6½% notes due 2021 dropped ½ point to close at 87¾ bid. The 6¾% notes due 2023 moved up ¼ point to close at 87¾ bid.

The Overland Park, Kan.-based propane name released its second-quarter earnings report on Friday, yielding disappointing results.

Earnings were pegged at 44 cents per unit, falling short of analyst predictions of 57 cents per unit.

Rite Aid down

Retailer Rite Aid’s paper dipped on Monday, market sources said.

The 6 1/8% paper due 2023 lost 1 point to close at 84 bid.

While no news about the Camp Hill, Pa.-based drug store chain was reported on Monday, it is one of the many retailers under pressure in the sector.

“With the way retail’s been going in the last few months, it’s worth watching,” a trader said. “I don’t know if anything’s happening there. Nothing’s public, it just traded a lot today.”

© 2015 Prospect News.
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