PG&E notes down after restructuring news; U.S. Steel mixed on preliminary Q3 results

By James McCandless

San Antonio, Oct. 10 – The distressed debt market was awash with news, driving trading in several sectors.

PG&E Corp.’s notes moved down after news broke that a bankruptcy judge had stripped the company of its exclusive right to put forward a restructuring plan.

Meanwhile, United States Steel Corp.’s issues traded flat to lower following the company’s release of its preliminary third-quarter earnings report.

Retailer Bed Bath & Beyond, Inc.’s paper was lifted as the market reacts to its appointment of a new chief executive officer.

Sector peer L Brands, Inc.’s notes diverged amid reports of corporate layoffs in the company’s embattled Victoria’s Secret segment.

A spike in oil futures begot gains for Chesapeake Energy Corp.’s and Superior Energy Services, Inc.’s issues while Whiting Petroleum Corp.’s paper saw mixed activity.

The pharma space saw Teva Pharmaceutical Industries Ltd.’s notes improve while Mallinckrodt plc’s issues moved differently.

PG&E notes lower

PG&E’s notes moved downward in Thursday’s session, traders said.

The 6.05% notes due 2034, which pushed up to 116¼ bid in Wednesday after-hours trading, fell 2¼ points to close at 114 bid.

After the Wednesday close, a judge ruled that the San Francisco-based bankrupt electric utility would no longer have the exclusive right to propose a restructuring plan.

The judge said that he made the ruling because the plan put forward by noteholders has the support of a wildfire victim committee.

He added that the decision could also force the opposing sides to come up with a compromise plan.

“That seems like that’s the best outcome,” a trader said. “The company will probably throw in a few billion more for the victims. It’s harder to see where they land on who owns what post-bankruptcy. That will probably be more contentious.”

Recently, the committee proposed a plan that pays victims $13.5 billion, more than the company’s proposed $8.4 billion.

The committee has until Oct. 17 to file a detailed plan in bankruptcy court.

U.S. Steel flat to lower

Meanwhile, U.S. Steel’s issues were flat to lower, market sources said.

The 6 7/8% senior notes due 2025 dropped 1½ points to close at 86 bid. The 6¼% senior notes due 2026 held level at 80½ bid.

Early Thursday, the Pittsburgh-based steel manufacturer released preliminary third-quarter earnings results.

The company said that it expects to report a loss of 20 to 26 cents per share, better than analyst estimates of a 32 cents per share loss.

In a statement, the company cited stronger shipments and better-than-expected manufacturing performance in its key segments.

“They’ve seen a bit of a crunch in the last few weeks so they’re trying to drum up positivity,” a trader said.

Recently, the company drew scrutiny from the market after purchasing a $700 million stake in competitor Big River Steel, which was financed under a credit facility.

This week, the company’s chief financial officer tendered his resignation.

Bed Bath lifted

Retailer Bed Bath & Beyond’s long-term paper was lifted, traders said.

The 5.165% senior notes due 2044 improved by 2¼ points to close at 70 bid. The 4.915% senior paper rose 2½ points to close at 75¼ bid.

In more Wednesday after-market news, the Union, N.J.-based retail chain announced the appointment of Mark Tritton as president and CEO.

Tritton was formerly the chief merchandising officer at Target.

Previous CEO Steven Temares resigned in May after pressure from activist investors concerning turnaround efforts.

In a cost-cutting measure, the company has committed to closing 60 stores by the end of the year.

L Brands diverges

Sector peer L Brands’ notes saw a divergence, market sources said.

The 6¾% senior notes due 2036 shaved off ¾ point to close at 83¾ bid. The 6 7/8% senior notes due 2035 picked up 1 point to close at 86¼ bid.

News broke on Thursday that the Columbus, Ohio-based retailer has cut 15% of its corporate staff.

Concurrently, the executive vice president and head of stores at its Victoria’s Secret arm has resigned.

In its most recent earnings report, the company reported lukewarm results for a majority of its holdings with Victoria’s Secret lagging the most.

Oil futures gain

A spike in crude oil futures led to a positive trend in energy names, traders said.

Futures rose on word from OPEC that it would explore options in order to stabilize the oil market in its December meeting.

West Texas Intermediate crude oil futures for November delivery hiked 96 cents to finish the session at $53.55 per barrel.

North Sea Brent crude oil futures for December delivery finished at $59.10 after a 78 cent gain.

Oklahoma City-based independent oil and gas producer Chesapeake Energy’s issues were positive.

The 8% senior notes due 2025 gained ¼ point to close at 67¾ bid. The 8% senior notes due 2027 added ¼ point to close at 65 bid.

Houston-based oilfield services provider Superior Energy’s paper followed the trend.

The 7 1/8% senior notes due 2021 rose 1½ points to close at 70¾ bid. The 7¾% senior notes due 2024 tacked on 1 point to close at 56 bid.

Denver-based producer Whiting Petroleum’s notes were flat to better.

The 6¼% senior notes due 2023 were level at 74 bid. The 6 5/8% senior notes due 2026 improved by ½ point to close at 64¾ bid.

Teva, Mallinckrodt eyed

In the pharma space, Teva’s issues were seen improving, market sources said.

The 3.15% senior notes due 2026 added 1½ points to close at 72¼ bid. The 2.2% senior notes due 2021 inched up ¼ point to close at 92¾ bid.

The Petach Tikva, Israel-based drug producer and its peers continue to work toward a solution on the mounting legal battles against them for opioid-related claims.

Staines-upon-Thames, England-based sector peer Mallinckrodt’s paper was flat to lower.

The 4 7/8% senior paper due 2020 slid ¾ point to close at 56¾ bid. The 5¾% senior notes due 2022 was unchanged at 36 bid.

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