PG&E notes under pressure as creditor fight continues; L Brands eyed in retail sector

By James McCandless

San Antonio, Dec. 24 – Though trading was light in the distressed debt space, newsmakers of the last week continued to remain in focus.

PG&E Corp.’s notes were under pressure as the company and a large creditor group remain at odds in its restructuring process.

In the retail space, L Brands, Inc.’s issues moved higher as it continues to feel the heat from an activist investor seeking sweeping changes.

Sector peer Bed Bath & Beyond Inc.’s paper moved on a similar track upward.

Despite improving oil futures, Southwestern Energy Co.’s, Antero Resources Corp.’s and Chesapeake Energy Corp.’s notes declined.

Manufacturer United States Steel Corp.’s issues continued on a downward slope.

Elsewhere, telecom name Intelsat SA’s paper gained ground while Frontier Communications Corp.’s notes varied.

PG&E down

PG&E’s notes were under pressure in a short session, traders said.

The 6.05% notes due 2034 dipped ¼ point to close at 106¼ bid.

As the San Francisco-based bankrupt electric utility works to come to a restructuring agreement that satisfies its stakeholders, a large group of creditors continues to oppose them at every turn.

Most recently the Elliott Management-led group said that it was willing to pay a group of wildfire victims $13.5 billion in cash.

The firm argues that the deal is better than the company’s half cash, half equity deal that was reached last week.

Creditors have also been lobbying California governor Gavin Newsom to endorse their restructuring plan as providing better outcomes for victims and meeting the governor’s criteria for increased state oversight.

L Brands, Bed Bath higher

In the retail space, L Brands’ issues moved higher, market sources said.

The 6 7/8% senior notes due 2035 rose ½ point to close at 90½ bid. The 5¼% senior notes due 2028 gained 1¼ points to close at 95 bid.

Last week, amid a continuing push for improvement from an activist investor, Moody’s Investors Service issued a downgrade for the Columbus, Ohio-based department store name.

The agency lowered its corporate family rating, probability of default rating, speculative grade liquidity rating and issue-level ratings.

Moody’s cited the company’s negative comparable-store sales and thin margins in its Victoria’s Secret brand.

Activist investors have pushed the company to spin off Victoria’s Secret.

Union, N.J.-based sector peer Bed Bath & Beyond’s long-term paper also improved.

The 5.165% senior paper due 2044 added 3¼ points to close at 74¾ bid. The 4.915% senior paper due 2034 picked up 1¼ points to close at 76¾ bid.

Oil names dip

Despite improvements in crude futures, distressed energy tranches slid, traders said.

West Texas Intermediate crude oil futures for February delivery garnered 59 cents to finish at $61.11 per barrel.

North Sea Brent crude oil futures for February delivery ended at $67.20 per barrel after an 81 cent rise.

Spring, Tex.-based independent oil and gas producer Southwestern Energy’s notes were pushed lower.

The 6.2% senior notes due 2025 dipped 2 points to close at 93 bid.

Denver-based producer Antero Resources’ issues were also negative.

The 5 5/8% senior notes due 2023 shaved off ¾ point to close at 82 bid. The 5% senior notes due 2025 declined by ¾ point to close at 74¼ bid.

Oklahoma City-based peer Chesapeake Energy’s paper followed the trend.

The 5¾% senior notes due 2023 shed 1¾ points to close at 69¾ bid.

U.S. Steel weaker

Manufacturer U.S. Steel’s notes continued on a downward slope, market sources said.

The 6.65% senior notes due 2037 lopped off ½ point to close at 79½ bid. The 6¼% senior notes due 2026 fell 1 point to close at 87 bid.

The Pittsburgh-based steelmaker’s structure continues to see weakness following a series of announcements last week.

In one fell swoop, the company said that it was slashing its fourth-quarter guidance, potentially laying off about 1,500 workers by idling a Michigan plant, cancelling share buybacks, and reducing its dividend to 1 cent per share from 5 cents per share.

Then over the weekend, the Trump administration reversed its decision to place tariffs on Brazilian steel products.

Intelsat notes gain

Elsewhere, telecom name Intelsat’s issues gained ground, traders said.

Intelsat (Luxembourg) SA’s 8 1/8% senior notes due 2023 added ¾ point to close at 61 bid.

Going into the new year, the Luxembourg-based satellite operator faces reduced standing and profits from a potential C-band spectrum auction.

After a legislative failure to establish a plan that would split potential proceeds between satellite operators and the Treasury, the Federal Communications Commission is now responsible for setting terms.

Norwalk, Conn.-based wireline communications name Frontier’s paper varied in direction.

The 10½% senior notes due 2022 lost 1¼ points to close at 48½ bid. The 11% senior paper due 2025 picked up ½ point to close at 50 bid.

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