Deutsche Bank higher despite negative headlines; PG&E better after settlement

By James McCandless

San Antonio, June 19 – The distressed debt space saw attention swirl around several news-making names on Wednesday.

Deutsche Bank AG’s notes ended higher despite negative headlines surrounding a money laundering probe and reorganization efforts.

Meanwhile, in utilities, PG&E Corp.’s issues were better after reaching a $1 billion settlement with public entities over wildfire claims.

Telecom name DISH Network Corp.’s paper declined as the company nears an agreement to buy out Sprint and T-Mobile wireless assets.

Sector peer Digicel Ltd.’s notes finished negative amid an ongoing dispute concerning its Antigua and Barbuda operations.

In energy, oil futures saw a slight dip while Superior Energy Services, Inc.’s issues headed upward, California Resources Corp.’s paper was mixed and EP Energy Corp.’s notes fell.

Manufacturer United States Steel Corp.’s issues were better, riding recent optimism of a potential U.S.-China trade deal.

Retailer Neiman Marcus Group, Inc.’s paper was trailing.

Deutsche Bank up

Financial name Deutsche Bank’s notes ended the day higher, traders said.

The 4 7/8% notes due 2032 gained 1¼ points to close at 84¼ bid.

The Frankfurt-based financial services provider’s notes were better despite a bevy of negative headlines piling up this week.

On Wednesday, news broke that United States investigators are looking into whether the company complied with regulations relating to the prevention of money laundering.

The name has already come under investigation from European regulators for the same thing.

The company is also working to increase profitability by enacting a systematic plan to rid itself of riskier assets over time.

Pressure on the name has been consistent after merger talks between it and Commerzbank broke down.

PG&E better

Meanwhile, PG&E’s issues saw a better day, market sources said.

The 3¾% notes due 2022 rose 1¾ points to close at 87¾ bid. The 4% notes due 2046 picked up ½ point to close at 87½ bid.

Late Tuesday, news broke that the San Francisco-based electric utility had reached a settlement to pay $1 billion to 18 local governments over damages sustained in 2015, 2017 and 2018 wildfires.

The settlement is subject to approval in bankruptcy court.

“It’s been off the radar for a while,” a trader said. “A lot of their stuff is back up to par or people just lost interest.”

The company filed for bankruptcy in January after warning that it could incur billions in liability charges after a string of California wildfires.

DISH declines

In the telecom space, DISH’s paper was declining, traders said.

The 5 7/8% paper due 2024 lost ¾ point to close at 93¾ bid.

The Englewood, Colo.-based pay-TV provider is working to close a deal to purchase wireless assets from Sprint and T-Mobile for at least $6 billion.

The deal would include wireless spectrum and Sprint’s Boost Mobile brand.

The U.S. Justice Department has previously indicated that asset sales were contingent on the approval of the Sprint-T-Mobile merger.

Digicel negative

Elsewhere in the sector, Digicel’s notes were also trending negative, market sources said.

The 6% notes due 2021 took off 1¾ points to close at 81½ bid. The 6¾% notes due 2023 also dropped 1¾ points to close at 61 bid.

The Kingston, Jamaica-based mobile phone network provider is clashing with the government of Antigua and Barbuda over the country’s spectrum.

In May, the company obtained a court order preventing the government from confiscating any of the 850 MHz spectrum it uses to give to the state-owned telecom, Apua.

Prime Minister Gaston Browne claimed that he has offered to buy out its assets in the country.

“A lot of jockeying over spectrum is coming to light recently,” a trader said. “The main focus on this issue has been Intelsat, but other names are gaining attention.”

Energy mixed

A slight drop in oil futures was not reflected in distressed energy tranches, traders said.

Houston-based oilfield services provider Superior Energy’s issues moved upward.

The 7 1/8% notes due 2021 improved by ¾ point to close at 65¼ bid.

Los Angeles-based independent oil and gas producer California Resources’ paper was mixed.

The 6% notes due 2024 picked up 1 point to close at 61 bid. The 8% notes due 2022 jumped up 2½ points to close at 70¾ bid.

Houston-based producer EP Energy’s notes slipped.

The 8% notes due 2025 fell 2 points to close at 28½ bid.

West Texas Intermediate crude oil futures for July delivery lost 14 cents to end the session at $53.76 per barrel.

North Sea Brent crude oil futures for August delivery finished the day at $61.82 per barrel after a 32-cent drop.

U.S. Steel improves

U.S. Steel’s issues were seen on an upward trend, market sources said.

The 6¼% notes due 2026 tacked on 2½ points to close at 89¼ bid. The 6.65% notes due 2037 edged up ¼ point to close at 84 bid.

The Pittsburgh-based steel manufacturer’s structure has trended positive over the last few days amid reports that President Trump is expected to meet with Chinese leadership in the coming weeks, sparking new hopes of a trade deal.

“I’m not too optimistic,” a trader said. “A lot of people dig into this name whenever anything concerning trade happens. It’s a swing one way or another.”

Neiman trails

In retail, Neiman Marcus’ paper was trailing in Wednesday activity, traders said.

The 14% paper due 2024 fell 1 point to close at 86¾ bid.

The Dallas-based luxury retailer continues to search for solutions in order to stay competitive in a tightening sector.

“They’re hard pressed to meet their targets and apparently all options are on the table,” a trader said. “There’s some chatter out there that they might replicate what PetSmart did with Chewy.”

Phoenix-based peer PetSmart recently launched an initial public offering for e-commerce segment Chewy.com after a protracted dispute with creditors over the site.

The company has a similar situation with its own e-commerce name MyTheresa.

“They might look at that model and think it could raise their profitability,” the trader said.

© 2015 Prospect News.
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