Occidental Petroleum better despite downgrade; Pyxus eyed as alternatives reviewed

By James McCandless

San Antonio, March 26 – In the second half of the week, the distressed debt space continued to focus on energy names and newsmakers as a positive tone spread.

Occidental Petroleum Corp.’s notes continued to lead the space, ending better despite receiving another downgrade.

Losses for oil futures did not affect the rise of Whiting Petroleum Corp.’s and California Resources Corp.’s issues while Valaris plc’s paper varied.

Meanwhile, tobacco name Pyxus International, Inc.’s notes diverged after the company announced a strategic alternatives review.

Real estate startup WeWork Cos. Inc.’s issues improved as the company works to reassure investors that it has enough cash to operate through the year.

In the e-commerce space, Diebold Nixdorf Inc.’s paper gained after a ratings agency shifted its view of the company to negative.

Elsewhere, aerospace name Bombardier Inc.’s notes shifted up as the company temporarily ramps down production.

Chemicals company Rayonier Advanced Materials Inc.’s issues tracked higher in the wake of its own production cuts.

Occidental better

Occidental Petroleum’s notes continued to lead distressed activity, ending in a better position Thursday, traders said.

The 3.4% senior notes due 2024 picked up 6¾ points to close at 51 bid. The 2.7% senior notes due 2022 added 2¼ points to close at 66¾ bid.

Before the open on Thursday, the Houston-based independent oil and gas producer received its third ratings downgrade in the last week.

S&P Global Ratings lowered all of the company’s ratings, including its issuer credit rating and unsecured issue-level ratings, giving it junk status.

Moody’s Investors Service and Fitch Ratings made similar cuts in recent days.

“It’s been the most popular name in recent days,” a trader said. “It’s a symbol of how E&P names are getting hammered.”

On Wednesday, the company said that it was slashing its production budget to $2.8 billion and cutting its chief executive officer’s salary as activist investor Carl Icahn won approval to name three new board directors.

Crude dips

Losses for oil futures did not affect positive trends in distressed energy tranches, market sources said.

West Texas Intermediate crude oil futures for May delivery dipped $1.89 to end the session at $22.60 per barrel.

North Sea Brent crude oil futures for May delivery closed at $26.34 per barrel after a $1.05 loss.

Denver-based producer Whiting Petroleum’s issues improved.

The 6¼% senior notes due 2023 gained ¾ point to close at 9¾ bid. The 6 5/8% senior notes due 2026 gained ¾ point to close at 11¼ bid.

Los Angeles-based peer California Resources’ paper also pushed higher.

The 6% senior notes due 2024 shot up 5¼ points to close at 9½ bid. The 8% senior secured notes due 2022 were lifted 3 points to close at 9 bid.

London-based contract driller Valaris’ notes varied.

The 5.2% senior notes due 2025 added 1 point to close at 13 bid. The 7¾% senior notes due 2026 dipped 2 points to close at 10 bid.

Pyxus diverges

Meanwhile, Pyxus’ issues diverged in direction, traders said.

The 9 7/8% notes due 2021 shaved off ¼ point to close at 18¾ bid. The 8½% notes due 2021 held level at 85 bid.

The Morrisville, N.C.-based tobacco name announced after the Wednesday close that it would be starting a strategic alternatives review to evaluate a range of actions to maximize its value.

The company has hired Lazard and RPA Advisors as advisers during the review.

Last month, the company said that it had started a “global operations efficiency program” to drive value creation by realigning brands to build “collective strength.”

WeWork up

WeWork’s paper improved by the close, market sources said.

The 7 7/8% senior paper due 2025 tacked on 2¼ points to close at 40 bid.

At the beginning of the month, the notes were trading in the 80’s context.

The New York-based coworking startup is working to reassure investors that it has enough cash on hand to continue operating amid and after the coronavirus pandemic.

News broke on Thursday that that company is telling its investors that it has about $4.4 billion in cash and cash commitments.

The name also said that it would probably not meet the targets it had previously set for 2020.

Last week, reports indicated that large investor SoftBank may back away from its commitment to purchase a $3 billion stake in WeWork.

“Everyone’s home and offices are empty,” a trader said. “The rent they must be collecting right now is probably miniscule.”

Diebold gains

In the e-commerce space, Diebold’s notes finished with a gain, traders said.

The 8½% senior notes due 2024 garnered 2½ points to close at 68 bid.

Late Wednesday, the North Canton, Ohio-based connected commerce name saw its outlook revised to negative from stable by S&P.

The agency cited the company’s drawing down of its $412.5 million revolving credit facility as a signal that it would be able to withstand short-term market disruption but long-term sales could be threatened.

In its February fourth-quarter earnings report, the company saw negativity after missing earnings estimates.

Bombardier rises

Aerospace name Bombardier’s issues saw an upward shift, market sources said.

The 8¾% senior notes due 2021 rose 2 points to close at 81½ bid. The 7 7/8% senior notes due 2027 picked up 2¾ points to close at 68¾ bid.

This week, the Montreal-based aerospace manufacturing name announced that it was temporarily ramping down aerospace and rail production across Canada in an effort to heed the government’s mandate to slow the spread of Covid-19.

On Wednesday, S&P lowered the company’s issuer credit rating to CCC+ from B- and also lowered its other ratings, though it argued that a short-term liquidity crisis was unlikely.

Rayonier higher

Meanwhile, Rayonier’s notes also tracked higher, traders said.

The 5½% senior notes due 2024 added 2½ points to close at 40¼ bid.

On Wednesday, the Jacksonville, Fla.-based company announced that it would temporarily halt lumber and newsprint production in its Canadian facilities for two weeks.

The move closes its Ontario and Quebec softwood sawmills and its Ontario newsprint plant.

“A lot of names that depend on everyday trade to operate are making these moves,” a trader said. “Before the current situation, global trade was already choppy.”

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