PDVSA higher amid Venezuela turmoil; FirstEnergy lower as subsidiary restructures

By James McCandless

San Antonio, Jan. 23 – Energy names were the talk of the distressed space with trading varied and moving in different directions on Wednesday.

Petroleos de Venezuela SA’s notes were on the rise despite turmoil for the company and in Venezuela in general.

Elsewhere in oil, Parker Drilling Co.’s issues declined as the company received court approval to pursue its bankruptcy plan.

While Wednesday saw another decline in oil futures, California Resources Corp.’s paper trended negative, but conversely Ultra Petroleum Corp.’s notes improved.

In utilities, FirstEnergy Solutions Corp. saw its notes fall after reaching a restructuring deal with its creditors.

Meanwhile, PG&E Corp.’s issues continued a negative trend.

Media and entertainment name iHeartMedia, Inc.’s paper improved after its restructuring plan was approved in court.

Retailer L Brands, Inc.’s notes finished mixed while PetSmart, Inc.’s issues moved lower.

PDVSA up

PDVSA’s notes were on the rise, traders said.

The 6% notes due 2024 picked up 3¾ points to close at 25¼ bid. The 6% notes due 2026 added 4 points to close at 25½ bid.

On Wednesday, the Caracas, Venezuela-based oil and gas producer’s notes garnered outsized attention as creditors attempted to recoup late interest payments amid political turmoil within the country.

The company recently disclosed that it owes bondholders $24.7 billion, slightly lower than the $25.1 billion it reportedly owed in 2017.

The market saw an opportunity as political unrest appeared to weaken President Nicolas Maduro’s tenure.

“There’s opportunity here, but we’re getting ahead of ourselves if we think they’re going to change overnight,” a trader said. “And even if it did, how would that change the pace of creditors seeking those late payments?”

Parker Drilling off

Elsewhere in energy, Parker Drilling’s issues were in decline, market sources said.

The 7½% notes due 2020 dropped 8 points to close at 50 bid. The 6¾% notes due 2022 lost 5½ points to close at 49 bid.

The Houston-based contract driller won court approval on Wednesday to pursue its Chapter 11 bankruptcy plan.

The plan would allow the company to swap out bond debt, raise new equity and relinquish control of the company to senior creditors.

The company filed for bankruptcy in December.

Oil names mixed

As oil futures declined again, top distressed oil names were varied in movement, traders said.

Los Angeles-based independent oil and gas producer California Resources’ paper ended the session mixed.

The 6% paper due 2024 fell 2½ points to close at 70 bid. The 8% paper due 2022 shaved off 2 points to close at 79½ bid.

Houston-based sector peer Ultra Petroleum’s notes gained.

The 6 7/8% notes due 2022 added ¾ point to close at 41¾ bid.

After the close on Wednesday, the company announced that it entered into an incremental exchange agreement for $24.1 million of the 6 7/8% paper for new notes.

Closing out the Wednesday session, West Texas Intermediate crude oil futures for February delivery lost 39 cents to end at $52.62 per barrel.

North Sea Brent crude futures ended the day at $61.14 per barrel after dropping 36 cents.

FirstEnergy falls

In utilities, FirstEnergy Solutions’ issues declined, market sources said.

The 6.85% notes due 2034 lost 3 points to close at 75 bid. The 6.05% notes due 2021 shed 1½ points to close at 76½ bid.

FirstEnergy Solutions saw its issues drop as the company reached a settlement with its creditors to exit Chapter 11 bankruptcy.

The agreement would see secured creditors paid $3 billion and control of the company would be handed over to unsecured creditors.

The power generation company first declared bankruptcy in March 2018.

PG&E continues to move down

Elsewhere in the utilities space, San Francisco-based electricity name PG&E’s paper was also negative.

The 6.05% paper due 2034 dropped 1¼ points to close at 82 bid. The 3.3% paper due 2027 fell 1½ points to close at 77 bid.

The company is preparing to file for bankruptcy after the possibility arose of a large accounting charge in the first-quarter due to potential liabilities in recent California wildfires.

iHeart rises

Entertainment name iHeartMedia’s notes improved, traders said.

The 7¼% notes due 2027 rose ½ point to close at 10½ bid.

On Wednesday, the San Antonio-based media name received bankruptcy court approval for its restructuring plan.

Part of the plan calls for the separation of its Clear Channel Outdoor Holdings Inc. segment, which was not part of its bankruptcy proceedings.

Its debt would be reduced from $16.1 billion to $5.75 billion.

Retailers mixed

In the retail space, Columbus, Ohio-based L Brands’ issues ended the session mixed.

The 6¾% notes due 2036 edged up ¼ point to close at 84¾ bid. The 5¼% notes due 2028 dropped 1½ points to close at 87 bid.

The company’s issues have been performing well over the last month in spite of reporting mixed holiday sales results.

Phoenix-based pet supplies retailer PetSmart’s paper was lower.

The 8 7/8% paper due 2025 lost 1 point to close at 62½ bid. The 5 7/8% paper due 2025 shaved off ¼ point to close at 78½ bid.

© 2015 Prospect News.
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