Washington Prime trades higher despite earnings; PG&E notes better after fine waived

By James McCandless

San Antonio, May 8 – As the week came to an end, the distressed debt market continued focus on names with earnings releases.

Washington Prime Group Inc.’s notes tracked higher despite the release of a largely negative first-quarter earnings report.

Meanwhile, PG&E Corp.’s issues finished in a better position after news broke that state regulators waived a large fine.

In the telecom space, GTT Communications, Inc.’s paper dipped after the company released a negative earnings report for the first quarter.

Sector peer Frontier Communications Corp.’s notes improved.

Real estate name Realogy Holdings Corp.’s issues ended the week with mixed results following a ratings downgrade.

As oil futures closed the week on a positive note, Whiting Petroleum Corp.’s paper saw similar gains while SM Energy Co.’s and Occidental Petroleum Corp.’s notes diverged.

Car rental name Hertz Global Holdings, Inc.’s issues were under pressure as the company tries to avoid a bankruptcy filing.

Washington Prime up

Washington Prime’s notes tracked higher by the end of the week, traders said.

The 6.45% senior notes due 2024 added 1¾ points to close at 57¾ bid.

The Columbus, Ohio-based retail-focused real estate investment trust’s capital structure was positive despite the company reporting a predominately negative first-quarter earnings report after the close on Thursday.

The company reported a profit of 22 cents per share, lower than the expected 24 cents per share that analysts had expected.

Revenues were underwhelming at $152.6 million.

The company also reported that it had only collected about 30% of contractual rent for April due to the economic effects of the coronavirus pandemic.

“Rent-dependent names like mall owners are in a bind right now,” a trader said.

In late March, Washington Prime announced the temporary closure of all of its indoor facilities in order to comply with government mandates aimed at slowing the spread of Covid-19.

PG&E better

Meanwhile, utilities name PG&E’s issues finished in a better position, a market source said.

The 6.05% senior notes due 2034 rose ¼ point to close at 112½ bid.

Late Thursday, news broke that California regulators had decided to waive a $200 million fine against the San Francisco-based bankrupt electric utility.

The fine was originally intended to serve as punishment for the company’s neglect of faulty equipment that sparked recent wildfires.

The utility objected to the fine on the grounds that it would hamper its ability to raise the money needed to finance its prospective June 30 bankruptcy exit.

PG&E is soliciting votes from creditors and shareholders for its reorganization plan.

GTT dips, Frontier adds

In the telecom space, GTT Communications’ paper dipped, traders said.

The 7 7/8% senior notes due 2024 lost 1½ points to close at 59 bid.

On Friday morning, the McLean, Va.-based cloud networking services provider joined the list of companies releasing first-quarter results.

The company reported a loss of 79 cents per share, well below where analysts expected a 26 cents per share loss.

Revenues came in at $424.7 million, also missing estimates.

Concurrently, the company announced that it drew $55 million under its $250 million revolver last quarter as part of a bid to maintain strong liquidity during the Covid-19 pandemic, Prospect News reported.

The company had $106.4 million of cash and cash equivalents as of March 31 and $174 million of unused and available capacity under its revolver.

Norwalk, Conn.-based wireline communications name Frontier’s notes improved.

The 10½% senior notes due 2022 garnered 2½ points to close at 33 bid. The 11% senior notes due 2025 improved by 2½ points to close at 33½ bid.

Realogy mixed

Real estate name Realogy’s issues ended the week with mixed results, market sources said.

The 5¼% senior notes due 2021 shaved off ½ point to close at 89½ bid. The 9 3/8% senior notes due 2027 moved up to 72½ bid.

At the Friday open, the Madison, N.J.-based real estate solutions name received a ratings downgrade from S&P Global Ratings.

The agency lowered the company’s overall rating, unsecured debt rating and secured debt rating.

S&P said that the downgrades are based largely on a report that home sales may drop 40% to 50% in the second quarter, which could have an outsized impact on the company’s core markets.

Oil positive

As oil futures closed the week on a positive note, distressed energy names trended the same way, traders said.

West Texas Intermediate crude oil futures for June delivery racked up $1.19 to settle the week at $24.74 per barrel.

North Sea Brent crude oil futures for July delivery finished at $30.97 per barrel after a $1.51 boost.

Denver-based independent oil and gas producer Whiting Petroleum’s paper ended with similar gains.

The 6¼% senior notes due 2023 added 2 points to close at 9 bid. The 6 5/8% senior notes due 2026 shifted up ¾ point to close at 7¾ bid.

SM Energy, another Denver-based producer, saw its notes diverge.

The 5 5/8% senior notes due 2025 inched up ¼ point to close at 31¼ bid. The 6 1/8% senior notes due 2022 held level at 37¾ bid.

Houston-based peer Occidental Petroleum’s issues also differed in direction.

The 2.9% senior notes due 2024 closed level at 77 bid. The 2.7% senior notes due 2022 shed 1¼ points to close at 87 bid.

Hertz lower

Elsewhere, car rental name Hertz’s paper was under pressure, market sources said.

The 6¼% senior notes due 2022 dropped 3 points to close at 19¼ bid.

This week, the Estero, Fla.-based vehicle rental company managed to delay a potential bankruptcy filing by reaching a forbearance agreement with creditors.

The deal extends the forbearance on skipped payments for asset-backed security vehicle transactions until May 22.

In response, S&P cut its overall rating to SD from CCC-.

The company is in talks with financial advisers on how to streamline its balance sheet and tackle its debt.

© 2015 Prospect News.
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