PG&E notes unchanged amid negative headlines; WeWork higher despite financing woes

By James McCandless

San Antonio, Oct. 11 – The distressed debt space finished the week focused on many of the names that shook the market with news.

PG&E Corp.’s notes were active but unchanged amid negative headlines of its planned outages and its restructuring process.

Elsewhere, coworking name WeWork Cos. Inc.’s issues pushed higher despite reports of its financing troubles.

Manufacturer United States Steel Corp.’s paper was lifted in the wake of its release of preliminary third-quarter results.

In retail, L Brands, Inc.’s notes improved as the market reacts to news of layoffs in its corporate office.

As oil futures gained, Whiting Petroleum Corp.’s and McDermott International, Inc.’s issues shot up while California Resources Corp.’s paper varied.

Telecom names Frontier Communications Corp.’s and Intelsat SA’s notes saw positivity.

PG&E level

PG&E’s notes were active but unchanged to finish the week, traders said.

The 6.05% notes due 2034 finished level at 114 bid.

The San Francisco-based bankrupt electric utility’s structure has been heavily traded this week amid continual shifts in its restructuring landscape.

The notes were sunk after news broke on Wednesday that the company’s bankruptcy court judge had terminated the PG&E’s exclusive right to submit a restructuring plan.

After a committee of creditors, wildfire victims and other stakeholders pushed their own plan, the judge allowed them to officially submit it in the hopes that the two sides could come to a settlement.

As of this week, the company’s plan calls for a cap of $8.4 billion in victim payouts whereas the opposing group outlines a $13.5 billion cap.

PG&E is also drawing public ire after it cut power to a wide swath of California in order to prevent another wildfire, putting about 1.5 million people in the dark this week.

WeWork higher

Elsewhere, WeWork’s issues were pushed higher on Friday, market sources said.

The 7 7/8% senior notes due 2025 gained 4½ points to close at 87 bid.

On Friday, the New York-based coworking name’s issues were performing better amid reports that the company could run out of money by the end of November if it does not secure new financing soon.

Following a botched initial public offering that led to the resignation of its chief executive officer, cost cutting measures have been initiated that may include layoffs by the end of this month.

“The terms might not be favorable, but they will probably get an injection from SoftBank,” a trader said.

U.S. Steel lifted

Manufacturer U.S. Steel’s paper was lifted by the close, traders said.

The 6¼% senior notes due 2026 rose 1¼ points to close at 81¾ bid. The 6 7/8% senior paper due 2025 improved by 2 points to close at 88 bid.

As the week came to a close, the Pittsburgh-based steelmaker’s structure saw higher trading levels after the company reported preliminary third-quarter earnings results.

The company anticipates reporting a loss of 20 to 26 cents per share, potentially better than the 32 cents per share loss that analysts are predicting.

U.S. Steel’s paper has seen higher levels of activity after announcing the recent purchase of a 49.9% stake in sector peer Big River Steel for $700 million, with the option of purchasing the rest within the next four years.

It has also seen the resignation of its chief financial officer.

L Brands improves

In the retail space, L Brands’ notes improved, market sources said.

The 6¾% senior notes due 2036 shifted up ¾ point to close at 84½ bid. The 5¼% senior notes due 2028 tacked on ¼ point to close at 93¼ bid.

The struggling Columbus, Ohio-based retailer saw more negative news this week as the company cut its corporate staff by 15%.

In tandem, segment Victoria’s Secret’s executive vice president and head of stores has resigned.

The company’s recent earnings have shown that the segment is its weakest link, showing lagging sales.

Oil futures gain

Another gain for oil futures led to energy tranches trending the same way, traders said.

Futures saw positive movements after news broke of an attack on an Iranian oil tanker.

West Texas Intermediate crude oil futures for November delivery rose $1.15 to settle the week at $54.70 per barrel.

North Sea Brent crude oil futures for December delivery finished at $60.51 per barrel after a $1.41 pickup.

Denver-based independent oil and gas producer Whiting Petroleum’s issues gained.

The 6¼% senior notes due 2023 jumped up 4 points to close at 78 bid. The 6 5/8% senior notes due 2026 added 2½ points to close at 67¼ bid.

Houston-based oil and gas engineering company McDermott’s paper followed the trend.

The 10 5/8% senior paper due 2024 rose 5¼ points to close at 24¼ bid.

Los Angeles-based producer California Resources’ notes varied in direction.

The 6% senior notes due 2024 shaved off ½ point to close at 32¾ bid. The 8% senior secured notes due 2022 improved by 1½ points.

Frontier, Intelsat better

Meanwhile, in telecom, Frontier’s issues were positive, market sources said.

The 10½% senior notes due 2022 gained ¾ point to close at 49½ bid. The 11% senior notes due 2025 picked up ½ point to close at 47½ bid.

The market continues to anticipate the Norwalk, Conn.-based wireline communications company’s presentation of a restructuring plan to creditors, which is reportedly due soon.

Various creditors have already told the company that an out-of-court restructuring would best serve stakeholders.

Luxembourg-based satellite operator Intelsat’s paper was seen rising.

Intelsat Jackson Holdings SA’s 5½% senior paper due 2023 added ½ point to close at 94¾ bid. Intelsat (Luxembourg) SA’s 8 1/8% senior notes due 2023 improved by 1½ points to close at 83½ bid.

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