Dean Foods down after ratings downgrade; U.S. Steel lower on trade news

By James McCandless

San Antonio, May 17 – The distressed space ended the week with a broad negative shift.

Dean Foods Co.’s notes were trending lower in the Friday session after receiving a ratings downgrade.

Elsewhere, United States Steel Corp.’s issues were lower amid news that the United States and Canada have agreed to end steel tariffs.

Sector peer AK Steel Holding Corp.’s paper was also in decline.

Meanwhile, in oil and gas, Weatherford International plc’s notes trickled down as the company works to gain more support for its restructuring.

Ensco Rowan plc’s and Superior Energy Services, Inc.’s issues were mixed while Alta Mesa Resources, Inc.’s paper shot up as oil futures slipped.

Drug maker Teva Pharmaceutical Industries Ltd.’s paper saw gains, ending a week of tumult.

Shipping name Navios Maritime Holdings Inc.’s notes improved.

Dean Foods down

Dean Foods’ notes were on a downward trend on the last day of the week, traders said.

The 6½% notes due 2023 dropped 3 points to close at 62 bid.

On Friday, the Dallas-based dairy products producer received a ratings downgrade from Moody’s Investors Service.

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

The outlook is negative.

The downgrade is a response to the company’s recent string of underperforming quarters and an expectation that the cycle will continue.

Recently, the company announced a strategic alternatives review that could result in a sale.

U.S. Steel lower

Elsewhere, U.S. Steel’s issues were also moving lower, market sources said.

The 6 7/8% notes due 2025 shed ¼ point to close at 91½ bid. The 6¼% notes due 2026 fell ¾ point to close at 86¾ bid.

The Pittsburgh-based steel producer’s structure saw negative movement after news broke that the U.S. has agreed to stop import tariffs on Canadian steel and aluminum.

The two parties will seek to end World Trade Organization litigation in the coming days.

“They were enjoying this little edge for a bit,” a trader said. “But I suppose that respite is over now.”

West Chester, Ohio-based sector peer AK Steel’s paper was also in decline.

The 7% paper due 2027 dropped ½ point to close at 83¼ bid.

Weatherford off

Meanwhile, in energy, Weatherford’s notes trickled down, traders said.

The 8¼% notes due 2023 lost ¼ point to close at 60½ bid. The 9 7/8% notes due 2024 also gave back ¼ point to close at 60 bid.

On Friday afternoon, the Baar, Switzerland-based oilfield services provider said holders of an additional 12% of its senior notes have signed the restructuring support agreement announced by the company on May 10, Prospect News reported.

The total percentage of noteholders on board with the plan is now over 74%.

The agreement would come as part of a pre-packaged Chapter 11 bankruptcy filing.

As part of the agreement, $7.4 billion of senior unsecured notes would be exchanged for approximately 99% of the equity in the company and $1.25 billion of new tranche B senior unsecured notes.

Oil slips

As oil futures ended lower, distressed oil tranches yielded mixed results, market sources said.

London-based contract driller Ensco Rowan’s issues finished mixed.

The 7¾% notes due 2026, while reaching as high as 84½ bid during the session, closed level at 82¾ bid. The 5.2% notes due 2025 lost ½ point to close at 75¾ bid.

Houston-based oilfield services provider Superior Energy’s paper also traded mixed.

The 7 1/8% paper due 2021, while rising to 81 bid, finished level at 78 bid. The 7¾% paper due 2024 gained 1½ points to close at 70 bid.

Houston-based producer Alta Mesa’s notes moved up.

The 7 7/8% notes due 2024 rose 1 point to close at 39½ bid.

West Texas Intermediate crude oil futures for June delivery were pushed 11 cents lower to end Friday at $62.76 per barrel.

North Sea Brent crude oil futures for July delivery closed at $72.21 per barrel after losing 41 cents.

Teva up

In the health care space, Teva’s issues were mildly on the way up, traders said.

The 4.1% notes due 2046 added ½ point to close at 69 bid.

The Petach Tikva, Israel-based generic drugmaker’s structure has endured a tumultuous week after news broke Monday that 44 states had filed an anti-trust lawsuit against the name and 19 others.

The suit claims that the group inflated drug prices and reduced competition.

Navios gains

Shipping name Navios’ paper saw an improvement, market sources said.

The 7 3/8% paper due 2022 picked up ¼ point to close at 64½ bid.

The Monaco-based shipper garnered positive attention after an announcement that asset manager Nut Tree Capital Management had purchased a 2.4 percent stake in the name.

© 2015 Prospect News.
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