PG&E notes recover with broad market; PHI issues improve despite ratings downgrade

By James McCandless

San Antonio, Jan. 9 – As the overall market continued a rally Wednesday, most of the distressed space followed.

PG&E Corp.’s notes bounced back from Tuesday declines caused by ratings downgrades and speculation of a bankruptcy filing.

In energy, PHI, Inc.’s issues moved higher despite a ratings downgrade.

Elsewhere in the space, another jump in oil futures led to gains in California Resources Corp. and Weatherford International plc’s paper while Sanchez Energy Corp.’s notes fell.

Meanwhile, retailer J.C. Penney Co., Inc.’s issues were mixed a day after the company reported a decline in holiday sales.

Sector peers Neiman Marcus Group, Inc. and L Brands, Inc.’s paper rose.

ATM maker Diebold Nixdorf Inc.’s issues rose on increased attention after a positive analyst report.

PG&E rises

Dominating the distressed space again, PG&E’s notes improved, traders said.

The 6.05% notes due 2034 rose 2 points to close at 89½ bid with $280 million of the bonds on the tape at the end of the session. The 3.95% notes due 2047 added ½ point to close at 76½ bid with $53 million of the bonds trading. The 3½% notes due 2020 gained ¾ point to close at 91½ bid as $50 million of the bonds were exchanged.

On Tuesday, the 6.05% bonds lost 5 points.

The San Francisco-based electric utility continued to be the main focus in distressed trading on Wednesday as the company continues to experience turmoil amid speculation that as a result of potential liabilities after recent wildfires in California, a large accounting charge could force it into bankruptcy within the next month.

Amid the speculation Tuesday, S&P Global Ratings downgraded the issuer credit ratings and short-term ratings for the company and subsidiary Pacific Gas & Electric Co.

On Wednesday, news broke that three of the company’s executives were slated to retire by the end of January.

“It’s just a waiting game right now,” a trader said. “It’s all very fluid.”

PHI up

Meanwhile, in oil and gas, PHI issues improved, market sources said.

The 5¼% notes due 2019 rose 1½ points to close at 69¾ bid.

On Tuesday, the Houston-based offshore transportation name received a CCC+ rating on the senior notes due March 2019, withdrawing a stable outlook that reflected a potential refinancing transaction that the agency expected in June 2018.

The agency also expressed concern about the impending maturity of the notes and whether the company would be able to refinance them.

“There’s some talk that they’ve waited too long to try and restart talks,” a trader said.

The notes have been under pressure since October when the company terminated a tender offer for $500 million of the notes outstanding.

Oil futures crossed back into the 50s context in the Wednesday session, which meant more gains for most distressed oil names.

Los Angeles-based producer California Resources’ bellwether paper was rising.

The 6% paper due 2024 added 3½ points to close at 72 bid. The 8% paper due 2022 jumped 5¼ points to close at 83¼ bid.

Baar, Switzerland-based oilfield services provider Weatherford’s notes were also rising.

The 8¼% notes due 2023 gained 1¼ points to close at 64 bid. The 9 7/8% notes due 2024 picked up 1¾ points to close at 65¼ bid.

Bucking the positive trend, Houston-based producer Sanchez Energy’s 6 1/8% notes due 2023 shed ¼ point to close at 21½ bid.

Crossing back into the 50s for the first time since Dec. 14, West Texas Intermediate crude oil futures for February delivery rose $2.58 to end the session at $52.36 per barrel.

North Sea Brent crude futures finished at $61.44 per barrel after a $2.72 gain Wednesday.

J.C. Penney mixed

Elsewhere, in retail, J.C. Penney’s paper was mixed, traders said.

The 8 5/8% paper due 2025 lost 1¾ points to close at 58¼ bid. The 7.4% paper due 2037 rose 2½ points to close at 40 bid.

The Plano, Texas-based department store chain announced a 3½% drop in holiday sales after the close on Tuesday, paired with talk of further store closures after moving forward with three closures already scheduled.

“Everyone was saying that this holiday season was make or break for a lot of troubled retailers, J.C. Penney included,” a trader said. “This isn’t necessarily ‘break’ for them, but they should’ve done better.”

Dallas-based sector peer Neiman Marcus’ notes were higher.

The 8% notes due 2021 traded up ½ point to close at 44¼ bid. The 7 1/8% notes due 2028 jumped 4¾ points to close at 74¾ bid.

Columbus, Ohio-based retailer L Brands’ issues were also rising.

The 5¼% notes due 2028 edged up ¼ point to close at 88¼ bid. The 6¾% notes due 2036 also added ¼ point to close at 86 bid.

Diebold gains

Diebold’s paper saw a boost, market sources said.

The 8½% paper due 2024 picked up 1 point to close at 64 bid.

Positive attention increased for the North Canton, Ohio, connected commerce solutions name after receiving a “buy” rating from Wall Street firm D.A. Davidson.

The company recently appointed Jeffrey Rutherford as chief financial officer on Jan. 4 after filling the role on an interim basis.

“They were better today, but that’s just one group,” a trader said. “Not everyone shares the same opinion, but they do look stable for now.”

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.