U.S. Steel notes eyed after Q4 earnings release; Intelsat better in telecom space

By James McCandless

San Antonio, Jan. 31 – As the week in distressed trading came to a close, manufacturing and telecom names were the most visible.

United States Steel Corp.’s notes were flat to lower after the company released a better-than-expected earnings report.

Meanwhile, satellite operator Intelsat SA’s issues closed better after days of negativity tied to revenue concerns.

Sector peer Frontier Communications Corp.’s paper slipped.

In the oil and gas space, EQT Corp.’s notes tracked lower as the company seeks to sell a portion of its royalty interest.

A negative day for oil futures led to losses for Whiting Petroleum Corp.’s, California Resources Corp.’s and Laredo Petroleum, Inc.’s issues.

Elsewhere, in utilities, PG&E Corp.’s paper lost ground as the company spent this week making strides with its creditors.

Retailer L Brands, Inc.’s notes diverged as news spreads that the company’s chief executive officer may resign and the company may sell one of its brands.

U.S Steel flat to lower

U.S. Steel’s notes varied in direction at the end of the week, traders said.

The 6 7/8% senior notes due 2025 shaved off ¼ point to close at 90¼ bid. The 6¼% senior notes due 2026 held level at 86 bid.

After the close on Thursday, the Pittsburgh-based steel manufacturer released a better-than-expected fourth-quarter earnings report.

The company showed a loss of 64 cents per share, better than the $1.14 per share loss predicted by analysts.

Revenues came in at $2.82 billion, also higher than the consensus estimates.

The company warned investors that the first quarter of 2020 would be a “trough” due to the seasonality of its mining operations and low shipments in some products.

Intelsat better

Meanwhile, telecom name Intelsat’s issues closed the session better, market sources said.

Intelsat (Luxembourg) SA’s 8 1/8% senior notes due 2023 jumped up 4½ points to close at 41¾ bid.

The gain snapped five days of negativity for the Luxembourg-based satellite operator, which has been the center of distressed telecom trading this week as concerns over how much revenue operators could receive from a C-band spectrum auction permeated.

“I suspect that there was a lot of short covering today,” a trader said.

Reportedly, the Federal Communications Commission is set to move forward with setting parameters for an auction to be held at the end of the year.

Congress is considering legislation that would limit the amount of revenue garnered by satellite names to $5 billion.

The C-Band Alliance, which includes Intelsat, estimates that as much as $77 billion in revenue could come out of the auction.

Norwalk, Conn.-based wireline name Frontier’s paper slipped.

The 10½% senior notes due 2022 lost ½ point to close at 45¾ bid. The 11% senior notes due 2025 shed ¼ point to close at 45¾ bid.

EQT lower

In the oil and gas space, EQT’s notes tracked lower, traders said.

The 3.9% senior notes due 2027 declined by ¾ point to close at 79¼ bid.

News broke on Friday afternoon that the Pittsburgh-based independent oil and gas producer is looking to raise as much as $1 billion by putting some of its royalty income up for sale.

According to preliminary terms, the buyer would take a 1% royalty interest in the net revenue generated from its production.

“They have to do something soon to begin handling their debt,” a trader said.

The name has about $5 billion in debt.

Oil futures negative

Distressed energy tranches saw losses as oil futures went negative, market sources said.

West Texas Intermediate crude oil futures for March delivery were pushed 58 cents lower to settle at $51.56 per barrel.

North Sea Brent crude oil futures for March delivery finished the week at $58.16 per barrel after a 13 cent dip.

Denver-based producer Whiting Petroleum’s issues moved lower.

The 6¼% senior notes due 2023 dropped 2¾ points to close at 70½ bid. The 6 5/8% senior notes due 2026 lopped off 2¼ points to close at 56¼ bid.

Los Angeles-based sector peer California Resources’ paper followed the sector trend.

The 6% senior notes due 2024 dived 4¼ points to close at 27 bid. The 8% senior secured paper due 2022 shaved off ½ point to close at 34 bid.

Tulsa, Okla.-based producer Laredo Petroleum’s notes were under pressure.

The 10 1/8% senior notes due 2028 lost 3¼ points to close at 89½ bid.

PG&E notes lower

Elsewhere, in utilities, PG&E’s issues lost ground, traders said.

The 6.05% notes due 2034 edged ½ point lower to close at 115 bid.

Over the last week, the San Francisco-based bankrupt electric utility has been gathering support from creditors for its restructuring plan.

On Wednesday, the company announced that it had reached agreements with more than two-thirds of its utility debt holders, clearing most of the hurdles for an exit from bankruptcy this year.

Last week, the company announced that it had gained the support of a large group of creditors who were previously proposing their own plan.

Despite this, the approval of California governor Gavin Newsom is required and remains a hurdle.

The governor said this week that his administration still considers the plan out of step with state regulations and its prepared to execute a takeover of the company if a compromise cannot be reached.

L Brands diverges

Retailer L Brands’ paper diverged by the close, market sources said.

The 6¾% senior notes due 2036 tacked on ¾ point to close at 99½ bid. The 5¼% senior notes due 2028 declined by ½ point to close at 98¾ bid.

The Columbus, Ohio-based department store name saw heightened activity in its structure after news on Wednesday that its CEO Leslie Wexner was in talks to resign his position and execute a sale of its Victoria’s Secret brand.

Investors and market watchers have been pressing the company to sell Victoria’s Secret, which has seen consistently declining sales over the last year.

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