PG&E notes rise despite ratings downgrades; Bombardier issues drop amid negative news

By James McCandless

San Antonio, Nov. 16 – The distressed market closed a week shortened by the Veterans Day holiday focused on news-driven names.

PG&E Corp.’s notes rose despite ratings downgrades and continuing worries over its role and liability for an active California wildfire.

Meanwhile, manufacturer Bombardier Inc.’s issues declined amid investor worries and Canadian regulatory action.

In the shipping space, Navios Maritime Partners LP’s paper fell despite a ratings upgrade. Sector peer Hornbeck Offshore Services, Inc.’s notes saw mixed trading.

Elsewhere, in coal, Cloud Peak Energy Inc.’s issues continued to climb.

A positive day in oil futures spurred gains in Sanchez Energy Corp.’s paper but California Resources Corp.’s notes saw a mixed day and there were sharp falls for EP Energy Corp.’s issues.

Retail name J.C. Penney Co., Inc.’s paper moved lower.

PG&E improves

PG&E’s notes improved on Friday, traders said.

The 3.95% notes due 2047 picked up ¼ point to close at 76 bid. The 6.05% notes due 2034 rose 2¼ points to close at 96 ¼ bid.

On Friday, Moody’s Investors Service downgraded the San Francisco-based electric utility’s senior unsecured rating, short-term commercial paper rating and the long-term ratings on subsidiary Pacific Gas & Electric Co. to BBB- from BBB.

Likewise, Fitch lowered the company’s long-term issuer default ratings to BBB- from BBB.

The company was targeted by the market this week for a possible role and potential liability in the “Camp Fire” in Northern California. The company was faulted in 2017 for a dozen blazes in the same area which started from company-owned power lines.

“It’s been bouncing up and down all week, which can’t be said for the equity, which got wrecked,” a trader said.

Bombardier loses

Elsewhere, Bombardier’s issues were moving lower, market sources said.

The 7½% notes due 2025 shed 2 points to close at 90 ¼ bid. The 6 1/8% notes due 2023 dropped 3 ½ points to close at 90 bid.

The Montreal-based manufacturer has seen negative pressure in recent weeks, reporting a weak cash flow forecast and coming under scrutiny from Quebec regulators opening a probe into the company’s executive stock-sale program.

“They’ve been getting killed,” a trader said. “It’s one thing after the other for them.”

Navios off

In shipping, Navios’ paper dropped, traders said.

The 11¼% notes due 2022 lost 2½ points to close at 84 bid. The 7 3/8% paper due 2022 fell 1½ points to close at 72½ bid.

The paper has exhibited a negative trend since the company reported a third-quarter loss of 18 cents per share in late August.

On Friday, Moody’s upgraded the Monaco-based shipping name’s corporate family rating to B2 from B3, probability of default rating and its term loan B instrument rating.

Elsewhere, Covington, La.-based sector peer Hornbeck Offshore’s notes were mixed.

The 5% notes due 2021 picked up 2 points to close at 69 bid. The 5 7/8% notes due 2020 ended the day level at 71½ bid.

Cloud Peak positive

In the energy sector, Cloud Peak’s issues extended a positive run, market sources said.

Its 12% notes due 2021 rose 1¾ points to close at 68¾ bid.

On Thursday, the 12% notes added 2½ points after picking up 4½ points on Wednesday.

Also on Thursday, Standard & Poor’s revised the Gillette, Wyo.-based coal producer’s recovery rating for the second-lien notes to 3 from 4.

Earlier in the week, the company terminated first-lien claims by eliminating its $150 million revolving credit facility.

Energy mixed

As oil futures finished the week positive, bellwether oil names saw mixed activity, traders said.

Houston-based independent oil and gas producer Sanchez Energy’s 6 1/8% paper due 2023 added 1 point to close at 37 bid.

Los Angeles-based peer California Resources’ notes were mixed.

Its 6% paper due 2024 edged up ¼ point to close at 76¼ bid. The 8% paper due 2022 lost ¼ point to close at 83¾ bid.

EP Energy, another Houston-based producer, saw its issues decline.

The 7¾% notes due 2022 tanked 11¾ points to close at 64½ bid. The 6 3/8% notes due 2023 dropped 3¼ points to close at 53¼ bid.

West Texas Intermediate crude oil futures finished the week level at $56.46 a barrel. Brent North Sea crude ended the day up 14 cents to $66.76 per barrel.

J.C. Penney lower

Meanwhile, J.C. Penney’s paper traded down, market sources said.

The 8 5/8% paper due 2025 slid ¾ point to close at 60 bid.

On Thursday, the Plano, Texas-based department store chain released its third-quarter earnings report, showing a 52 cents per share loss where analysts estimated a 57 cents per share loss.

While the earnings surpassed estimates, the market focused on disappointing revenues of $2.73 billion, the company’s missed guidance targets and its reduction to future guidance.

© 2015 Prospect News.
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