Ensco Rowan jumps; energy trends higher; Frontier mixed amid ratings downgrade

By James McCandless

San Antonio, June 26 – At the midpoint of the week, the distressed space shifted focus to energy and telecom tranches.

Ensco Rowan plc’s notes jumped up as the market saw positivity in the name amid rising oil futures and increased investments for offshore drilling.

Elsewhere in the space, Hi-Crush Partners LP and Chaparral Energy, Inc.’s issues followed futures upward as Weatherford International plc’s paper ended mixed.

In telecom, Frontier Communications Corp.’s notes finished mixed as a ratings agency issues several downgrades.

Sector peer Digicel Group Ltd.’s issues fell as the company claims that it has not received a buyout offer from the Antiguan government.

Drugmakers Teva Pharmaceutical Industries Ltd.’s and Mallinckrodt plc’s paper were both pushing higher.

Utilities name PG&E Corp’s notes were under pressure as the company and its creditors propose dueling restructuring plans.

Ensco Rowan jumps

In the energy sector, Ensco Rowan’s notes jumped higher, traders said.

The 5.2% senior unsecured notes due 2025 rose 5½ points to close at 74 bid. The 7¾% notes due 2026 added 1½ points to close at 74½ bid.

On Wednesday, the London-based contract driller was the focal point of energy names amid a run-up in oil futures.

West Texas Intermediate crude oil futures for August delivery gained $1.55 to end the day at $59.38 per barrel.

North Sea Brent crude oil futures for August delivery finished at $66.49 per barrel after a $1.44 improvement.

“There’s a lot of money pouring into the name now that the merger is done,” a trader said. “There’s also an uptick in new projects that involve drilling, which is another boon for them.”

Also on Wednesday, the company said it has begun cash tender offers to purchase outstanding notes issued by Ensco Rowan and its wholly owned subsidiaries Ensco International Inc. and Rowan Cos., Inc. for an aggregate purchase price of up to $600 million, exclusive of accrued interest, Prospect News reported.

The offering applies to seven series of notes.

Oil names rise

Following oil futures, other popular energy tranches trended higher, market sources said.

Houston-based oil and gas logistics name Hi-Crush’s issues moved up.

The 9½% senior unsecured notes due 2026 tacked on ½ point to close at 70¼ bid.

Oklahoma City, Okla.-based producer Chaparral’s paper also gained during the session.

The 8¾% senior unsecured notes due 2023 added 1½ points to close at 61½ bid.

Baar, Switzerland-based oilfield services provider Weatherford’s notes saw mixed results.

The 8¼% senior unsecured notes due 2023 rose 2¾ points to close at 53½ bid. The 9 7/8% notes due 2024, while pushing past 53 bid during the day, ended level at 52¼ bid.

Frontier mixed

Elsewhere, in telecom, Frontier’s issues also finished mixed, traders said.

The 10½% senior unsecured notes due 2022 picked up 1¼ points to close at 67½ bid. The 11% notes due 2025 shaved off ¼ point to close at 61¾ bid.

Moody’s Investors Service issued several downgrades to the Norwalk, Conn.-based wireline communications name on Wednesday.

The agency lowered its corporate family rating, probability of default rating, speculative grade liquidity rating and several issue-level ratings.

Moody’s cited the company’s slowness in acting on improving its fundamentals and addressing its 2022 maturities.

While the company is considering alternatives from a restructure to a bankruptcy, a large stakeholder has pushed for the company to enact a restructure out of court.

“The writing’s on the wall, it’s just a question of when they’ll read it,” a trader said.

Digicel falls

Sector peer Digicel’s paper was falling, market sources said.

The 6% senior unsecured paper due 2021 shed 1 point to close at 80¼ bid.

On Wednesday, the Kingston, Jamaica-based mobile phone network provider announced that, despite reports to the contrary, it had not received any offers to buy out its spectrum in Antigua and Barbuda.

The company called Prime Minister Gaston Browne’s assertion that his administration had tabled a buyout offer “complete fiction.”

In May, the name received a judgment that protected its share of spectrum in the country from confiscation by a government-owned competitor.

Teva, Mallinckrodt higher

Pharma name Teva’s notes spent the day moving higher, traders said.

The 3.15% senior unsecured notes due 2026 gained ½ point to close at 77 bid. The 4.1% notes due 2046 added 2 points to close at 67 bid.

The Petach Tikva, Israel-based generic drug name has seen its structure buckle under the pressure of its $85 million settlement with Oklahoma over opioid-related allegations.

The settlement sparked a conversation over how much money the company would have to pay out for similar lawsuits down the road.

Staines-upon-Thames, England-based peer Mallinckrodt’s issues were also better.

The 5 5/8% senior unsecured notes due 2023 picked up ¼ point to close at 76 bid.

PG&E slides

Utilities name PG&E’s paper trended lower, market sources said.

The 3.95% senior unsecured notes due 2047 lost 1¾ points to close at 89¼ bid.

The San Francisco-based bankrupt utility is currently in the process of planning its exit from bankruptcy, which has sparked a conflict between the company and its creditors.

The two groups have been shopping competing plans for a restructure, with different figures for funds to pay out wildfire claims.

The creditor plan also pushes for an overhaul of its management and board members as well as asset sales.

© 2015 Prospect News.
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