Whiting eyed as company shores up liquidity; Scientific Games active after downgrade

By James McCandless

San Antonio, March 30 – During the Monday distressed debt session, energy remained the largest attention getter as the sector saw more weakness.

Whiting Petroleum Corp.’s notes varied after the company announced that it drew from its credit facility in order to boost liquidity.

Sector peer California Resources Corp.’s issues declined as reports indicated that the company is exploring a bankruptcy filing.

Oil futures took another spill, though Occidental Petroleum Corp.’s and Antero Resources Corp.’s paper diverged.

Meanwhile, gaming name Scientific Games Corp.’s notes were active and mixed after receiving a ratings downgrade.

Real estate name Washington Prime Group Inc.’s issues dropped after announcing that it would extend its property closures.

Mall-focused peer CBL & Associates Properties, Inc.’s paper also fell.

Elsewhere, manufacturer United States Steel Corp.’s notes saw a modest gain.

Retail name L Brands, Inc.’s issues differed in direction in the wake of its move to stop its dividend and furlough employees.

Whiting varies

Whiting Petroleum’s notes varied as Monday came to a close, traders said.

The 6¼% senior notes due 2023 gained 2 points to close at 11 bid. The 6 5/8% senior notes due 2026 moved down 2¾ points to close at 6¾ bid.

After the close on Friday, the Denver-based independent oil and gas producer announced that it drew $650 million from its credit facility.

The move was to boost liquidity and make sure that it has the ability to fund its ongoing operations.

Some of its structure is set to mature this week, namely a convertible security.

“It’s hard to see how they go forward without a restructure,” a trader said. “With them and other producers, there’s also a going-concern issue if oil prices hold at these low levels.”

Recently, the company announced that it would reduce its 2020 capital budget by $185 million, dropping one rig and one completion crew.

CalRes down

Sector peer California Resources’ issues spent the session declining, market sources said.

The 6% senior notes due 2024 dropped 3¾ points to close at 3 bid.

Late Friday, reports indicated that the Los Angeles-based producer is considering Chapter 11 bankruptcy to handle its $5 billion debt load.

The company is another E&P name that has seen strife as oil prices continue to drop and the Covid-19 pandemic weakens the market.

In a statement released on Friday, the company said that it would continue to “consider all options with our advisors as we work through this unprecedented downturn and do not intend to provide updates on ongoing discussions.”

Two weeks ago, in response to the downturn, the company cancelled exchange and subscription offers for three series of notes.

Oil dips

As oil futures saw another spill, distressed energy names yielded different results, traders said.

West Texas Intermediate crude oil futures for May delivery dipped $1.42 to settle the session at $20.09 per barrel.

North Sea Brent crude oil futures for May delivery finished at $22.76 per barrel after slipping $2.17.

Houston-based Occidental Petroleum’s paper diverged.

The 2.9% senior notes due 2024 shaved off ½ point to close at 55 bid. The 2.7% senior notes due 2022 tacked on 2 points to close at 72 bid.

Denver-based producer Antero Resources’ notes also took different paths.

The 5 1/8% senior notes due 2022 held level at 51¾ bid. The 5 5/8% senior notes due 2023 garnered 3¼ points to close at 41 bid.

Scientific Games mixed

Meanwhile, Scientific Games’ issues were active and mixed, market sources said.

The 5% senior secured notes due 2025 added 1¾ points to close at 87¼ bid. The 7% senior notes due 2028 lost ¼ point to close at 63 bid.

Early Monday, Moody’s Investors Service issued a downgrade for the Las Vegas-based gaming and lottery name.

The agency lowered the company’s corporate family rating, probability of default rating, speculative grade liquidity rating and senior unsecured notes rating.

The outlook is negative.

Moody’s cited the customers lost due to the reduction in casino visitation, gaming machine use, and lottery betting operations in response to government efforts to restrict social gatherings and coronavirus spread.

Washington Prime, CBL drop

Real estate name Washington Prime’s paper saw a drop, traders said.

The 6.45% senior notes due 2024 dived 7 points to close at 54½ bid.

Late last week, the Columbus, Ohio-based real estate investment trust announced that it would extend closures on all of its enclosed assets with indoor common areas to April 6 from March 29.

Concurrently, the company said that it was withdrawing its full-year 2020 guidance issued last month due to market uncertainty.

The company had previously announced the closures last week, leaving open the possibility of letting government agencies use those areas for Covid-19 related purposes.

Its open-air facilities are expected to remain open.

Chattanooga, Tenn.-based REIT CBL’s notes also fell.

The 5¼% senior notes due 2023 shed ½ point to close at 25 bid. The 4.6% senior notes due 2024 were docked 2 points to close at 20 bid.

U.S. Steel up

Elsewhere, U.S. Steel’s issues saw a modest gain, market sources said.

The 6¼% senior notes due 2026 improved by 1¾ points to close at 64 bid. The 6 7/8% senior notes due 2025 rose ¾ point to close at 68½ bid.

The gains for the Pittsburgh-based steelmaker represented a small recovery from Friday’s drop that came after announcing that it would reduce capital spending for 2020 by $125 million to $750 million as economic weakness persisted.

Among other steps it is taking to weather the pandemic, U.S. Steel said it would idle one of its furnaces immediately and idle some operations at two facilities starting in May and increase its borrowings under its revolving credit facility by $800 million.

In response, S&P Global Ratings lowered the company’s senior unsecured debt rating to B- from B.

L Brands flat to higher

Retailer L Brands’ paper differed in direction at the end of the day, traders said.

The 6¾% senior notes due 2036 reached up 1 point to close at 75¼ bid. The 5¼% senior notes due 2028 closed level at 75 bid.

The Columbus, Ohio-based retail name said on Friday afternoon that due to the inability to predict the timing of store re-openings, it indefinitely extended a deadline for store closures past its initial target of March 29.

In order to bolster its financial standing, the company halted its dividend, reduced its expenses and capital expenditures, cut its executive compensation and furloughed its store associates.

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