California Resources weaker in tightening regulatory atmosphere; Intelsat notes active

By James McCandless

San Antonio, Nov. 22 – The distressed debt space finished the week with more attention paid to newsmakers in the energy and telecom sectors.

California Resources Corp.’s notes lost ground after a week of tightening regulatory conditions on energy in the state.

Declining oil futures were mirrored by Chesapeake Energy Corp.’s issues while Whiting Petroleum Corp.’s notes were mixed and Oceaneering International, Inc.’s notes gained.

Meanwhile, satellite operator Intelsat SA’s issues varied in direction as the government opposed its plan for a private C-band auction.

Telecom sector peer Frontier Communications Corp.’s paper improved.

Retailer L Brands, Inc.’s notes rose in the aftermath of this week’s earnings announcement for the third quarter.

Utilities name PG&E Corp.’s notes rose following a week of shifting ground in its bankruptcy case.

A day after announcing layoffs, WeWork Cos. Inc.’s paper was active but flat.

California Resources eyed

California Resources’ notes lost ground during the last day of the week, traders said.

The 6% senior notes due 2024 shed 2½ points to close at 17½ bid. The 8% senior secured notes due 2022 dropped 5½ points to close at 23½ bid.

This week, the Los Angeles-based independent oil and gas producer’s structure was pushed further into distressed territory after California governor Gavin Newsom announced that the state would halt new approvals for fracking and similar operations.

Following a leak at a Chevron plant, Newsom said that no new approvals would be given until state regulators completed a safety investigation.

The company said that steamflooding, a practice it employs, is exempt from the ban.

Oil names diverge

Declining oil futures were the backdrop for diverging energy tranches, market sources said.

West Texas Intermediate crude oil futures for January delivery lost 81 cents to settle the day at $57.77 per barrel.

North Sea Brent crude oil futures for January delivery finished at $63.39 per barrel after a 58 cent dip.

Oklahoma City-based oil and gas producer Chesapeake Energy’s issues were under pressure.

The 8% senior notes due 2025 shed 2½ points to close at 53 bid. The 8% senior notes due 2027 declined by 2 points to close at 51 bid.

Denver-based sector peer Whiting Petroleum’s paper diverged.

The 6¼% senior notes due 2023 shaved off ½ point to close at 68½ bid. The 6 5/8% senior paper due 2026 picked up ½ point to close at 57¾ bid.

Houston-based oil and gas engineering name Oceaneering’s notes gained.

The 4.65% senior notes due 2024 added 1¼ points to close at 90¼ bid. The 6% senior notes due 2028 improved by 2½ points to close at 92½ bid.

Intelsat active

Meanwhile, telecom name Intelsat’s issues varied in direction, traders said.

Intelsat (Luxembourg) SA’s 8 1/8% senior notes due 2023 held level at 50 bid. The 9½% senior notes due 2023 weakened 1¾ points to close at 63¼ bid.

The Luxembourg-based satellite operator also saw heightened scrutiny from the market after Federal Communications Commission chairman Ajit Pai came out in favor of a public auction for C-band spectrum, or 5G.

The move is adverse to what Intelsat and its peers had been advocating for as part of the three-company C-Band Alliance, which wanted a private auction between members of the alliance.

Before the announcement, the consortium made a last push to sway the government to its side by offering to pay a portion of the proceeds from the auction to the U.S. Treasury.

“The focal point would be just how much revenue they would lose out on if they don’t get first pick,” a trader said.

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

The 10½% senior notes due 2022 shot up 1¾ points to close at 45½ bid. The 11% senior notes due 2024 tacked on 2¼ points to close at 45¾ bid.

L Brands rises

Retailer L Brands’ notes were on the rise on Friday, market sources said.

The 6 7/8% senior notes due 2035 gained 2 points to close at 88¾ bid. The 6¾% senior notes due 2036 garnered 2½ points to close at 85½ bid.

Late Wednesday, the Columbus, Ohio-based department store name issued its third-quarter earnings report, yielding mixed results.

The company showed that earnings were 2 cents per share, matching analyst predictions.

Overall sales underperformed at about $2.67 billion.

The market fixated on the performance of its Victoria’s Secret segment, which reported an 8% loss in sales.

The company continues to have pressure applied on it by an activist investor, which is pushing for spin offs of weaker segments.

PG&E gains

Utilities name PG&E’s issues followed an upward trend, traders said.

The 6.05% senior notes due 2034 added ½ point to close at 104 bid.

The week’s developments in the San Francisco-based electric utility’s bankruptcy case led to heightened attention on the issues.

On Wednesday, the company petitioned a bankruptcy judge for an extension of its exclusive right to solicit votes on a Chapter 11 plan.

Later in the week, governor Newsom called for the company to let the state appoint board members with greater authority if the utility does not meet safety standards.

WeWork active, flat

Startup WeWork’s paper was active but unmoved, market sources said.

The 7 7/8% senior notes due 2025 were flat at 71 bid.

The New York-based coworking company announced on Thursday that it was laying off 2,400 employees nationwide, almost 20% of its workforce.

News reports in previous weeks had pegged the amount of jobs on the cutting board at 4,000.

The cost-cutting measures come after a botched initial public offering and an $8 billion rescue financing package from large investor SoftBank.

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