Occidental rises after new CFO named; PG&E lower in utilities space

By James McCandless

San Antonio, April 6 – As markets opened the week broadly higher, the distressed debt space was focused on noncohesive energy names.

Occidental Petroleum Corp.’s notes rose after the company named a new chief financial officer at the end of last week.

Despite weaker oil futures, California Resources Corp.’s and Antero Resources Corp.’s issues saw varied activity as Diamond Offshore Drilling, Inc.’s paper gained.

In the utilities space, PG&E Corp.’s notes tracked lower as wildfire victims said that they want a better settlement.

Meanwhile, automotive name Tenneco Inc.’s issues dipped after an activist investor bought a large stake in the company.

Tobacco producer Pyxus International Inc.’s paper was pushed lower after receiving a ratings downgrade.

In manufacturing, United States Steel Corp.’s notes diverged in the wake of last week’s ratings cut.

Elsewhere, in retail, L Brands, Inc.’s issues trended upward.

Occidental up

Occidental Petroleum’s notes opened the week with a rise, traders said.

The 2.7% senior notes due 2027 rose 2¼ points to close at 74¾ bid. The 2.9% senior notes due 2024 garnered 3¾ points to close at 61¾ bid.

After the close on Friday, the Houston-based independent oil and gas producer announced that it had appointed company executive Robert Peterson as its new chief financial officer, with current financial manager Cedric Bergher transitioning into another role.

It also announced the departure of a senior vice president for strategy.

At the end of March, the name brought back former chief executive officer Stephen Chazen to serve as non-executive chairman.

Also in recent weeks, the company reached an agreement with activist investor Carl Icahn, resolving a long-running dispute with Icahn appointing his choices to three board seats as the company committed to cost reductions.

Oil mixed

Despite weaker oil futures, distressed energy tranches saw varied activity, market sources said.

West Texas Intermediate crude oil futures for May delivery dropped $2.26 to finish at $26.08 per barrel.

North Sea Brent crude oil futures for June delivery ended at $33.05 per barrel after a $1.05 slide.

Los Angeles-based producer California Resources’ issues varied.

The 6% senior notes due 2024 dipped 3 points to close at 3 bid. The 8% senior secured notes due 2022 tacked on 1½ points to close at 4½ bid.

Denver-based peer Antero Resources’ paper also saw mixed movements.

The 5 1/8% senior paper due 2022 picked up ½ point to close at 49½ bid. The 5 5/8% senior paper due 2023 shaved off ¼ point to close at 42¼ bid.

Houston-based contract driller Diamond Offshore’s notes gained.

The 5.7% senior notes due 2039 improved by 2¾ points to close at 15¾ bid.

“The space was all over the place today,” a trader said.

PG&E lower

In the utilities space PG&E’s issues tracked lower, traders said.

The 6.05% notes due 2034 were docked 1 point to close at 98 bid.

On Monday, documents filed by wildfire victims in bankruptcy court indicated that the $13.5 billion settlement that was reached between them and the San Francisco-based electric utility was now insufficient, with the group officially withdrawing support of the deal.

As recently as Friday, the company was touting the support of the group of about half of all claimants.

The company needs the support if it expects to exit bankruptcy in June.

“I think they can meet that goal,” a trader said. “It might take a bit of an adjustment but I doubt it will take long.”

The settlement agreement was reached in December 2019, the first in a series of settlements reached with victims, government agencies, insurance providers and criminal prosecutors.

Tenneco dips

Meanwhile, automotive name Tenneco’s paper experienced a dip, market sources said.

The 5% senior paper due 2026 lost 2¾ points to close at 47¼ bid.

In an early Monday disclosure, the Lake Forest, Ill.-based auto parts maker said that activist investor Carl Icahn had purchased 3.48 million shares of the company’s common stock on April 1.

The move adds to Icahn’s 9.9 percent stake in the name.

At the end of last week, Tenneco announced a series of measures meant to soften the blow of current economic weakness.

The company said that it would be suspending or reducing production at facilities worldwide, furloughing workers, cutting executive pay and reducing 2020 capital spending.

It also drew down $700 million under its $1.5 billion revolving credit facility.

In January, an Icahn deputy urged the company in a letter to the board of directors to sell part or all of itself.

Pyxus pushed

Tobacco producer Pyxus’ notes were pushed lower in the Monday session, traders said.

The 8½% notes due 2021 slid 1¾ points to close at 87¾ bid.

As market conditions continue to deteriorate under the pressure of the coronavirus pandemic, the Morrisville, N.C.-based tobacco products producer was one of many to receive a slate of ratings downgrades on Monday.

S&P Global Ratings cut the company to CCC- from CCC, and also cut the company’s asset-based lending facility rating and its issue-level ratings.

The agency argues that the pandemic increases the uncertainty surrounding refinancing the company’s near-term debt maturities and its decision to appoint restructuring advisors.

Last month, the name announced the hiring of Lazard and RPA Advisors to assist in a strategic alternatives review.

U.S. Steel diverges

In manufacturing, U.S. Steel’s issue saw a divergence, market sources said.

The 6.65% senior notes due 2037 dipped 1¼ points to close at 55¾ bid. The 6 7/8% senior notes due 2025 shot up 2¼ points to close at 69 bid.

At the tail end of last week, the Pittsburgh-based steelmaker had its ratings cut as it faces its own issues stemming from the Covid-19 outbreak.

Fitch Ratings lowered the company’s long-term issuer default rating to B- from B+ and affirmed a negative outlook, citing its belief that steel end markets scaling back or stopping production altogether will lead to increased uncertainty for the sector.

The name has taken to slashing capital spending and idling some production facilities.

L Brands better

Elsewhere, in retail, L Brands’ paper moved on an upward trend, traders said.

The 5¼% senior paper due 2028 added ¼ point to close at 70¼ bid.

Last month, the Columbus, Ohio-based retailer was one of the first in the sector to announce that it would temporarily shutter its Victoria’s Secret and Bath & Body Works retail locations after government regulations forced nonessential businesses to close.

At the same time, it drew down $950 million from an existing credit line.

Later in the month, the company announced that it would be furloughing its workers until further notice.

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