PG&E lower in reorganization dispute; McDermott notes decline amid ratings downgrade

By James McCandless

San Antonio, Sept. 23 – The distressed debt space kicked off a new week with much of the attention on energy names.

PG&E Corp.’s notes moved lower as a dispute between the company and its creditors over its restructuring intensified.

Oil and gas name McDermott International, Inc.’s issues went negative as the company received a ratings downgrade.

As oil futures rose, California Resources Corp.’s, Chesapeake Energy Corp.’s and Whiting Petroleum Corp.’s paper saw differing movements.

In telecom, Frontier Communications Corp.’s notes traded in varied directions as the market anticipates a restructuring proposal from the company.

Satellite operator Intelsat SA’s issues also saw mixed movements.

Drug maker Teva Pharmaceutical Industries Ltd.’s paper trailed as Endo International plc’s notes gained.

PG&E lower

PG&E’s notes moved lower in Monday’s activity, traders said.

The 6.05% notes due 2034 fell ½ point to close at 111¾ bid.

On Monday, the San Francisco-based bankrupt electric utility announced that it had formalized its $11 billion subrogation settlement with insurance companies.

The settlement was reached in principle earlier in the month.

The company also urged a judge in bankruptcy court to reject a competing reorganization plan that was submitted last week by a group of unsecured creditors and a committee of wildfire victims.

While the company plans to cap wildfire victim payouts at $8.4 billion, the rival plan calls for a $24 billion settlement.

The company argued in a filing that the plan skirts bankruptcy law that requires claims of similar priority to be paid at the same time.

“It isn’t going as smoothly as they had anticipated,” a trader said. “It’s hard to tell what direction the judge will want to go.”

A bankruptcy court judge is expected to render a decision on whether the company retains the exclusive right to a reorganization plan next month.

McDermott negative

In oil and gas, McDermott’s issues saw negativity, market sources said.

The 10 5/8% senior notes due 2024 shaved off ½ point to close at 28 bid.

The notes saw about $36 million on the tape by the end of the day.

S&P Global Ratings lowered the Houston-based oil and gas engineering company’s rating to CCC from B-.

The agency also lowered its term loan and unsecured debt rating, citing an increased risk of a distressed exchange.

The company’s structure crashed last week after news broke that the company had hired turnaround advisers, recovering slightly after further news that it was interested in selling one of its subsidiaries for $2.5 billion.

A bondholder group consisting of 30% of the company’s creditors has also hired advisers in order to weigh options for the name.

Oil names on the move

Despite oil futures gains, distressed energy names differed in direction, traders said.

West Texas Intermediate crude oil futures for November delivery saw a 55 cent upward shift, closing at $58.64 per barrel.

North Sea Brent crude oil futures for November delivery finished at $64.77 after a 49 cent improvement.

Los Angeles-based independent oil and gas producer California Resources’ paper was flat to lower on the day.

The 6% senior notes due 2024 held level at 40½ bid. The 8% senior secured notes due 2022 dipped ¾ point to close at 57¼ bid.

Oklahoma City-based sector peer Chesapeake Energy’s notes also saw non-cohesive activity.

The 8% senior notes due 2025 tacked on 1 point to close at 84¼ bid. The 8% senior notes due 2027 lost ¾ point to close at 80 bid.

The two tranches combined saw about $27 million on the tape.

Denver-based producer Whiting Petroleum’s issues followed the sector’s trend.

The 6¼% senior notes due 2023 ended unchanged at 84 bid. The 6 5/8% senior notes due 2026 dropped 2½ points to close at 75 bid.

Frontier, Intelsat eyed

In telecom, Frontier’s paper varied on Monday, market sources said.

The 10½% senior notes due 2022 lost ½ point to close at 47¾ bid. The 11% senior notes due 2025 ended level at 47½ bid.

The Norwalk, Conn.-based wireline communications name is expected to present a restructuring plan to creditors soon that would slash its debt load.

“Everyone is expecting a filing if they can’t come to an agreement,” a trader said.

Luxembourg-based satellite operator Intelsat’s notes also experienced mixed movements.

Intelsat Jackson Holdings SA’s 5½% senior notes due 2023 shaved off ¼ point to close at 93 bid. Intelsat (Luxembourg) SA’s 8 1/8% senior notes due 2023 improved by ½ point to close at 82 bid.

Teva trails, Endo gains

Pharma name Teva’s issues were trailing through the session, traders said.

The 6¾% senior notes due 2028 slid 1 point to close at 83½ bid. The 2.8% senior notes due 2023 lost ½ point to close at 82½ bid.

The Petach Tikva, Israel-based generic drug manufacturer’s structure continues to see pressure from the market as the industry works through thousands of lawsuits stemming from the opioid epidemic.

The company has paid out millions in settlements this year, with more expected in the coming months.

Dublin-based peer Endo’s paper gained.

The 6% senior notes due 2023 added ½ point to close at 62 bid.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.