PG&E mixed as insurance fund unveiled; Adient lower despite analyst upgrade

By James McCandless

San Antonio, April 12 – The distressed debt space saw more focus on news-driven names to end the week.

PG&E Corp.’s notes were mixed as the governor of California detailed a plan to set up an insurance fund for wildfire liabilities.

Manufacturer Adient plc’s issues moved lower despite receiving a recent string of analyst upgrades.

In chemicals, Hexion, Inc.’s paper was mixed as its DIP term loan started trading.

Meanwhile, oil and gas name Ensco Rowan plc’s notes were similarly mixed a day after the new entity finalized its merger.

Oil futures bounced back, though California Resources Corp., EP Energy Corp., and Denbury Resources Inc.’s issues all traded mixed.

Elsewhere, in telecom, Intelsat SA and Frontier Communications Corp.’s paper varied in direction.

PG&E mixed

PG&E’s notes closed the Friday session mixed, traders said.

The 3.3% notes due 2027 ended at Thursday’s level of 88¾ bid. The 3.95% notes due 2047 added ½ point to close at 81½ bid.

On Friday, California governor Gavin Newsom officially proposed a plan for a wildlife insurance fund that would shield the San Francisco-based bankrupt utility from financial stress in paying out wildfire damage claims.

The money for the fund would be raised through a multitude of stakeholders, including utility customers.

“I think this all falls on who pays what share and if it’s enough,” a trader said.

The company filed for Chapter 11 bankruptcy in January after warning shareholders about billions in potential liabilities stemming from 2017 and 2018 wildfires.

Adient lower

Despite positive headlines, Adient’s issues saw a slight dip, market sources said.

The 4 7/8% notes due 2026 shaved off ¼ point to close at 79½ bid.

The Dublin-based automotive seating manufacturer received an upgrade from BofA Merrill Lynch on Friday, the third upgrade this month.

The company has been in the process of implementing a turnaround strategy that may include debt refinancing.

“They look poised to stabilize,” a trader said.

Hexion mixed

Meanwhile, Hexion’s paper also ended the day mixed, traders said.

The 6 5/8% paper due 2020 rose ½ point to close at 80 bid. The 10% paper due 2020 lost 1¼ points to close at 78¾ bid.

On Friday, the Columbus, Ohio-based chemicals producer’s $350 million 18-month debtor-in-possession term loan began trading, with levels quoted at par bid, par ½ offered, Prospect News reported.

Pricing on the DIP term loan is Libor plus 275 basis points with a 0% Libor floor and it was sold at an original issue discount of 99.75.

Facing an outsized short-term debt load, the company filed for Chapter 11 bankruptcy last month.

Ensco Rowan mixed

In oil and gas, Ensco Rowan’s notes followed the day’s trend of moving in varied directions, market sources said.

The 7¾% notes due 2026 gained 1¼ points to close at 88½ bid. The 5.2% notes due 2025 slipped ¼ point to close at 80½ bid.

After the close on Wednesday, the London-based contract driller had merged with sector peer Rowan to become the new entity.

Each Rowan shareholder received 2.75 shares of Ensco for each Rowan share under the terms of the merger agreement.

The $2.38 billion deal was announced in October 2018.

Oil down

As oil futures trended lower, popular distressed oil tranches saw mixed activity, traders said.

Los Angeles-based independent oil and gas producer California Resources’ issues yielded mixed results.

The 6% notes due 2024 closed level at 81 bid. The 8% notes due 2022 picked up 3 points to close at 85 bid.

Houston-based producer EP Energy’s paper followed suit.

The 6 3/8% paper due 2023 added ¼ point to close at 20¼ bid. The 7¾% paper due 2022 shed ½ point to close at 25 bid.

Houston-based sector peer Denbury’s notes were also mixed

The 6 3/8% notes due 2021 dropped 1 point to close at 83 bid. The 5½% notes due 2022 picked up 1½ points to close at 76¼ bid.

West Texas Intermediate crude oil futures for May delivery added 31 cents to close Friday’s session at $63.89 per barrel.

North Sea Brent crude oil futures for June delivery finished at $71.55 per barrel after rising 72 cents.

Intelsat, Frontier non-uniform

Elsewhere, in telecom, Intelsat’s issues were non-uniform in their movements, market sources said.

Intelsat Jackson Holdings SA’s 5½% notes due 2023 finished flat at 90½ bid. Intelsat (Luxembourg) SA’s 8 1/8% notes due 2023 jumped up 3½ to finish at 77 bid.

Norwalk, Conn.-based sector peer Frontier’s paper followed suit.

The 11% paper due 2025 edged up ¼ point to close at 64½ bid. The 10½% paper due 2022 declined 1½ points to close at 72¾ bid.

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