McDermott notes continue fall after cost overrun report; Univision issues leak after poor earnings

By James McCandless

San Antonio, Feb. 14 – The Thursday session in the distressed space saw mixed results amid continuing earnings reports.

McDermott International, Inc.’s notes continued to drop after the company announced it would incur a large accounting charge after one of its projects experienced cost overruns.

Meanwhile, Hornbeck Offshore Services, Inc.’s issues rose after beating expectations in its Q4 earnings report.

Despite another day for rising oil futures, California Resources Corp.’s and YPF SA’s paper went lower while Ensco plc’s notes closed mixed.

In the communications space, Univision Communications Inc. issues sunk after a disappointing Q4 report.

Elsewhere in the sector, mixed Q4 results led to CenturyLink, Inc.’s paper also trading mixed.

In pharmaceuticals, Teva Pharmaceutical Industries Ltd.’s notes fell as a ratings agency affirmed a negative outlook.

Diebold Nixdorf, Inc.’s issues moved higher on the back of its surprisingly positive earnings report.

McDermott drops

Leading distressed energy activity, McDermott’s notes dropped, traders said.

The 10 5/8% notes due 2024 lost 5½ points to close at 80 bid.

The notes lost 5¾% notes on Wednesday.

On Wednesday, the Houston-based oil and gas engineering company’s notes dropped rapidly after it announced that it would incur a charge of $168 million after a co-owned natural gas facility construction project in Louisiana experienced cost overruns, largely placing the blame on labor costs.

“I don’t think the amount it’s lost in the last few days is reflective of what’s actually happening,” a trader said. “I think it’ll recover soon, but people are just seeing how far they can take it.”

Hornbeck up

Elsewhere in the oil and gas space, Hornbeck’s issues gained, market sources said.

The 5% notes due 2021 picked up ¾ point to close at 53¾ bid. The 5 7/8% notes due 2020 jumped 4½ points to close at 60 bid.

Late Wednesday, the Covington, La.-based petroleum transportation name issued its fourth-quarter earnings report.

It reported a 79 cents per share loss, though the market took it as a positive as it beat analyst expectations of an 85 cents per share loss.

The company also reported lagging revenues of $53.92 billion.

“The bar isn’t very high for these oil names right now,” a trader said.

Oil names mixed

Rising oil futures were not enough to carry distressed energy names upward, traders said.

Los Angeles-based independent oil and gas producer California Resources’ paper slipped.

The 8% paper due 2022 shaved off 1 point to close at 78¾ bid.

Buenos Aires-based integrated producer YPF’s notes were also lower.

The 7% notes due 2047 dropped ½ point to close at 82 bid.

London-based contract driller Ensco’s issues closed the day mixed.

The 7¾% notes due 2026 picked up ½ point to close at 82½ bid. The 7.2% notes due 2027 lost 1½ points to close at 80¼ bid.

The Thursday close saw West Texas Intermediate crude oil futures for March delivery finish at $54.41 per barrel after a 51 cent lift.

North Sea Brent crude futures added 96 cents to close at $64.57 per barrel.

Univision off

Meanwhile, in communications, Univision’s paper sunk, market sources said.

The 5 1/8% paper due 2025 trended down 1¾ points to close at 87¾ bid. The 5 1/8% paper due 2023 also dropped 1¾ points to close at 91 bid.

The New York City-based media name released its fourth-quarter earnings, posting a loss of $40.2 million.

The private company blamed its troubles on decreased advertising revenue and its ongoing dispute with DISH, which dropped the company’s cable network in June 2018.

CenturyLink mixed

Meanwhile, communications peer CenturyLink’s notes were mixed, traders said.

The 7.65% notes due 2042 gained 2 points to close at 87¼ bid. The 7.6% notes due 2039 fell ½ point to close at 84 bid.

The Monroe, La.-based telecom company released its fourth-quarter report on Wednesday.

It showed a 37 cents per share profit, narrowly beating out analyst predictions of 36 cents per share.

The company’s $5.78 billion in sales came up short of analyst expectations by about $20 million.

CenturyLink also garnered negative attention after it concurrently announced that it would be cutting its dividend in half.

Teva negative

In the drug space, Teva’s issues were falling, market sources said.

The 2.8% notes due 2023 lost ½ point to close at 88¾ bid. The 3.15% notes due 2026 also shed ½ point to close at 81¼ bid.

On Thursday, the Petach Tikva, Israel-based generic drug manufacturer received a negative outlook from S&P Global Ratings.

The agency cited the company’s risks to its free-cash flow and weakening positions of its products, though conceded that its position in the market remained strong.

The company reported a 53 cents per share profit for the fourth quarter, missing analyst estimates of 54 cents per share.

Diebold rises

Diebold’s paper was higher, traders said.

The 8½% paper due 2024 shot up 6 points to close at 83 bid.

On Wednesday, the paper rose 12½ points.

The market latched onto the North Canton, Ohio-based connected commerce solutions name’s paper on Wednesday after it surprised with its fourth-quarter earnings.

Despite the 8 cents per share loss, the market saw the bright side in its revenues of $1.29 billion.

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