California Resources rises on earnings beat; Delphi up despite earnings, plant closure

By James McCandless

San Antonio, Nov. 1 – The distressed debt space finished the week with continued attention paid to names releasing earnings.

California Resources Corp.’s notes improved after reporting a profit in the third quarter, surprising analysts.

Sector peer Antero Resources Corp.’s issues also shifted upward after the release of its lukewarm third-quarter earnings.

A rise in oil futures led to gains for Whiting Petroleum Corp.’s and Range Resources Corp.’s paper.

Meanwhile, Delphi Technologies plc’s notes finished higher after showing earnings and announcing a plant closure.

Manufacturer United States Steel Corp.’s issues were also gaining as part of the slew of earnings reports out recently.

Utilities name PG&E Corp.’s paper continued to rise despite California’s governor threatening a state takeover.

Elsewhere, Community Health Systems, Inc.’s notes trailed in the health care space.

In telecom, Frontier Communications Corp.’s issues were under water.

California Resources eyed

California Resources’ notes were seen improving at the end of the week, traders said.

The 6% senior notes due 2024 shot up 12 points to close at 26¼ bid. The 8% senior secured notes due 2022 also picked up 12 points to close at 41½ bid.

The two tranches saw about $46 million on the tape.

The structure recovered the losses that were incurred on Thursday in the run-up to the company’s earnings announcement.

After the close on Thursday, the Los Angeles-based independent oil and gas producer released its third-quarter earnings report.

The company reported a profit of 35 cents per share, far outpacing the 37 cents per share loss that analysts had expected.

Revenues were also surprisingly positive at $681 million.

“It surprised everyone,” a trader said. “The bonds were really taken down a peg yesterday when everyone thought it would go the other way.”

Antero up

Sector peer Antero Resources’ issues also shifted upward, market sources said.

The 5 1/8% senior notes due 2022 gained 4¼ points to close at 79½ bid. The 5% senior notes due 2025 improved by 3¼ points to close at 69 bid.

The Denver-based producer was another name in the energy space to put out third-quarter earnings this week.

Late Tuesday, the company showed a loss of 49 cents per share, worse than what analysts had predicted at a 26 cents per share loss.

Revenues were higher than predicted at $1.12 billion.

Oil rises

A boost for oil futures was mirrored by distressed energy tranches, traders said.

West Texas Intermediate crude oil futures for December delivery added $2.02 to end the week at $56.20 per barrel.

North Sea Brent crude oil futures for January delivery finished at $61.69 per barrel after a $2.07 rise.

Whiting Petroleum, another Denver-based producer, saw its paper rise.

The 6¼% senior paper due 2023 tacked on 2½ points to close at 75½ bid. The 6 5/8% senior paper due 2026 improved by 3 points to close at 65 bid.

Fort Worth-based peer Range Resources’ notes followed futures upward.

The 4 7/8% senior notes due 2025 inched up ¼ point to close at 81 bid.

Delphi higher

Meanwhile, auto parts name Delphi’s issues were seen moving higher, market sources said.

The 5% senior notes due 2025 picked up 1 point to close at 88 bid.

The London-based powertrain maker released its third-quarter earnings, also coming after the Thursday close.

The name showed a 56 cents per share profit, matching analyst expectations.

The company concurrently announced that it would be shuttering its operations at a plant in upstate New York, offering some displaced workers jobs at nearby facilities and severance pay to others.

U.S. Steel gains

Manufacturer U.S. Steel’s paper was also gaining, traders said.

The 6¼% senior notes due 2026 jumped up 3 points to close at 87¼ bid. The 6 7/8% senior notes due 2025 added 2½ points to close at 93¼ bid.

The Pittsburgh-based steelmaker joined the crowd putting out third-quarter earnings in the tail end of the week.

The company issued a loss of 21 cents per share, narrower than the expected 29 cents per share loss.

Revenues also passed estimates at $3.069 billion.

“What they talked about the most today was their cost cutting efforts,” a trader said. “That’s what everyone likes to hear.”

PG&E better

In utilities, PG&E’s notes continued on a positive track, market sources said.

The 6.05% senior notes due 2034 rose ¾ point to close at 102 bid.

The San Francisco-based bankrupt electric utility’s structure maintained positive movement despite the governor of California stating that a government takeover of the name is possible.

Governor Gavin Newsom said that a backup plan is being developed if PG&E “is unable to secure its own fate and future.”

The company is working with creditors to come to a compromise restructuring plan after losing the exclusive right to put forward a plan.

Community Health trails

Elsewhere, Community Health’s issues were seen trailing, traders said.

The 6 7/8% senior notes due 2022 dipped 1½ points to close at 76¼ bid.

This week, the Franklin, Tenn.-based hospital operator announced that it wants to exchange $2.6 billion of notes for 8% senior secured notes due 2027 and 6 7/8% senior unsecured notes due 2028.

The move triggered a downgrade from S&P Global Ratings.

Frontier declines

Telecom name Frontier’s paper was under water, market sources said.

The 10½% senior notes due 2022 shaved off ½ point to close at 47¼ bid. The 11% senior notes due 2025 shed ½ point to close at 47 bid.

The Norwalk, Conn.-based wireline telecom is under pressure to declare bankruptcy from hedge fund Discovery Capital Management, which is acting as a representative to some major holders.

The company is set to begin restructuring talks with creditors soon.

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