Intelsat drops amid bankruptcy talk; PG&E lower as court approves restructuring plan

By James McCandless

San Antonio, Feb. 5 – Despite overall improvements in the distressed debt market, volume leaders in the telecom and utilities sectors were depressed.

Intelsat SA’s notes dropped amid reports that the company may file for Chapter 11 bankruptcy as a result of decreased revenue from a C-band spectrum auction.

Sector peer Frontier Communications Corp.’s issues varied in direction.

Telecom-related REIT Uniti Group Inc.’s paper was lifted as the company priced an offering of senior secured notes.

Meanwhile, utilities name PG&E Corp.’s notes saw negativity as the company received court approval for its amended restructuring plan.

Oil futures saw a spike, followed by Whiting Petroleum Corp.’s and California Resources Corp.’s issues while EQM Midstream Partners, LP’s paper diverged.

In the retail space, Rite Aid Corp.’s notes improved as the company settled an exchange offer for its 2023 notes.

Department store name L Brands, Inc.’s issues gained ground.

Intelsat notes lower

Intelsat’s notes dropped at the top of the distressed debt market, traders said.

Intelsat (Luxembourg) SA’s 8 1/8% senior notes due 2023 dived 8¼ points to close at 40½ bid. Intelsat Jackson Holdings SA’s 5½% senior notes due 2023 lost 3 points to close at 82 bid.

By the end of the session, the two tranches combined to see about $82 million change hands.

Late in the day on Wednesday, reports indicated that the Luxembourg-based satellite operator is considering filing for Chapter 11 bankruptcy if U.S. regulators don’t raise the level of compensation operators would receive from a C-band spectrum auction.

“I would say that’s very likely,” a trader said. “If they can’t get that revenue, they will file very soon.”

The news comes a day before Federal Communications Commission chairman Ajit Pai is set to formally announce the auction at a telecom event.

Lawmakers and regulators have so far been opposed to large payouts to satellite names, with U.S. Senate legislation proposing to cap the number at $7 billion.

Norwalk, Conn.-based wireline communicator Frontier’s issues varied in direction.

The 10½% senior notes due 2022 shaved off ¼ point to close at 47 bid. The 11% senior notes due 2025 garnered ½ point to close at 47½ bid.

Uniti lifted

Elsewhere, telecom-related property name Uniti Group’s paper was lifted, market sources said.

The 8¼% senior notes due 2023 shot up 3 points to close at 86¼ bid. The 7 1/8% senior paper due 2024 jumped up 5 points to close at 84½ bid.

After the Wednesday close, the Little Rock, Ark.-based communications real estate investment trust priced an upsized $2.25 billion of five-year senior secured notes at par to yield 7 7/8%, Prospect News reported.

The issue size was originally marketed at $1.75 billion and came in below yield talk in the 8% area.

In the midst of the pricing, Fitch Ratings downgraded the company’s long-term issuer default rating to CCC from B.

The agency cited the company’s ongoing litigation with large customer Windstream.

PG&E down

Meanwhile, utilities name PG&E’s notes saw negativity, traders said.

The 6.05% notes due 2034 shed 3¼ points to close at 113 bid.

During the Wednesday session, the San Francisco-based bankrupt electric utility received approval to enter into a restructuring support agreement with an informal committee of senior unsecured noteholders and shareholders, Prospect News reported.

The agreement resolves disputes surrounding pre-bankruptcy debt and establishes parameters for the issuance of new debt.

The plan still requires the approval of California governor Gavin Newsom, who has expressed his desire to reach a quick compromise.

If a compromise is not reached, Newsom would push for a state takeover of the utility.

Oil spikes

Distressed energy names trended higher as oil futures saw a spike, market sources said.

West Texas Intermediate crude oil futures for March delivery added $1.14 to end the day at $50.75 per barrel.

North Sea Brent crude oil futures for April delivery finished at $55.28 per barrel after a $1.32 pickup.

Denver-based independent oil and gas producer Whiting Petroleum’s issues followed futures upward.

The 6¼% senior notes due 2023 rose 3¼ points to close at 74 bid. The 6 5/8% senior notes due 2026 tacked on 1¾ points to close at 59¾ bid.

Los Angeles-based producer California Resources’ paper followed futures upward.

The 6% senior notes due 2024 improved by ½ point to close at 29 bid. The 8% senior secured paper due gained 1¼ points to close at 34¼ bid.

Canonsburg, Pa.-based pipeline name EQM Midstream’s notes diverged in direction.

The 5½% senior notes due 2028 dipped 2 points to close at 89 bid. The 6½% senior notes due 2048 added 1½ points to close at 84½ bid.

Rite Aid, L Brands up

In the retail space, Rite Aid’s issues saw an improvement, traders said.

The 6 1/8% senior notes due 2023 rose ½ point to close at 93 bid.

The Camp Hill, Pa.-based drug store chain announced on Wednesday that it settled its offer to exchange up to $600 million of its outstanding $1,753,490,000 2023 notes for newly issued 7½% senior secured notes due 2025.

As of Feb. 3, about 93.18% of the outstanding amount was tendered for exchange.

Columbus, Ohio-based department store name L Brands’ paper gained ground.

The 6¾% senior notes due 2036 tacked on ¾ point to close at 99½ bid. The 5¼% senior notes due 2028 gained ¾ point to close at 99¾ bid.

© 2015 Prospect News.
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