California Resources dips; Adient rises as subsidiary prices new issue

By James McCandless

San Antonio, April 25 – Energy names were the main driver of distressed trading on Thursday, trending lower.

California Resources Corp.’s notes dipped amid a sell-off of the company’s equity and pressures in its home state on oil production.

Sector peer Superior Energy Services, Inc.’s issues were similarly negative after releasing a lackluster earnings report.

Ensco Rowan plc and Halcon Resources Corp.’s paper declined with oil futures.

In manufacturing, Adient plc’s notes rose in anticipation of a new issue of seven-year senior secured notes that priced after the close.

Meanwhile, finance name Deutsche Bank AG’s issues dropped after it terminated merger talks with competitor Commerzbank.

In the health care space, Teva Pharmaceutical Industries Ltd.’s and Mallinckrodt plc’s paper were pushed lower.

Telecom name Intelsat SA’s notes fared better on Thursday.

Cal Res dips

Dominating the distressed space, California Resources’ notes saw a dip, traders said.

The 6% notes due 2024 fell 1 point to close at 69 bid. The 8% notes due 2022 dipped 3 points to close at 79¼ bid.

The 8% notes saw more than $69 million of the bonds on the tape by day’s end.

Despite the uptick in activity in the Los Angeles-based independent oil and gas producer, there was no overarching reason for the movement.

“It’s already a major, every day trader,” a trader said. “There’s just a bit of pressure on it right now. That earnings report is supposed to come out soon.”

Also driving trading was the news that a California Assembly committee has advanced a bill that would restrict oil and gas production in the state.

Superior Energy off

Elsewhere in the oil and gas space, Superior Energy’s issues were also negative, market sources said.

The 7¾% notes due 2024 saw a 5¾ points drop to close at 74½ bid.

After the close on Tuesday, the Houston-based oilfield services name released a disappointing earnings report.

The company reported a loss of 31 cents per share, missing analyst expectations of a 24 cents per share loss.

It also posted lagging revenues of $467.18 million.

Oil lower

Distressed oil tranches followed declining oil futures, traders said.

London-based contract driller Ensco Rowan’s paper fared negative.

The 7¾% paper due 2026 shaved off ¼ point to close at 88¼ bid. The 5.2% paper due 2025 fell ¼ point to close at 81½ bid.

Houston-based producer Halcon’s notes were also falling.

The 6¾% notes due 2025 lost 2¼ points to close at 66¾ bid.

West Texas Intermediate crude oil futures for June delivery dropped 68 cents by the end of the session, closing at $65.21 per barrel.

North Sea Brent crude oil futures for June delivery closed at $74.35 per barrel after a 22-cent loss.

Adient rises

Elsewhere, Adient’s issues finished the day rising, market sources said.

The 4 7/8% notes due 2026 gained 1¼ points to close at 83 bid.

The Dublin-based car seat manufacturer was in focus on Thursday as the market anticipated the pricing of new seven-year senior secured notes.

After the close, a subsidiary priced an upsized $800 million issue of the new notes at par to yield 7%, Prospect News reported.

The deal was upsized from an initial $750 million.

“Outside of energy, this took up a lot of space today,” a trader said.

Deutsche Bank drops

Meanwhile, in the finance space, Deutsche Bank’s paper moved down, traders said.

The 4 7/8% paper due 2032 fell 3 points to close at 85 bid.

On Thursday morning, the Frankfurt-based financial services name and competitor Commerzbank announced that merger talks have been terminated.

The banks placed the blame on potential outsized risks associated with the merger and restructuring costs.

The talks began in March amid a flurry of financial concerns surrounding the company, namely its involvement in money laundering probes.

Teva, Mallinckrodt down

In health care, Teva’s notes were under pressure, market sources said.

The 3.15% notes due 2026 shed ¼ point to close at 84 bid.

On Wednesday, the Petach Tivka, Israel-based generic pharmaceuticals name garnered increased attention after halting development on a cluster headache medication.

Staines-Upon-Thames, U.K.-based sector peer Mallinckrodt’s issues also declined.

The 4¾% notes due 2023 gave back ½ point to close at 76 bid.

Intelsat better

Telecom name Intelsat’s paper closed the day better, traders said.

Intelsat Jackson Holdings SA’s 5½% paper due 2023 rose ¼ point to close at 90¼ bid. Intelsat (Luxembourg) SA’s 8 1/8% paper due 2023 improved by ¾ point to close at 77 bid.

The Luxembourg-based satellite operator’s structure continues to see pressure as stakeholders wait for the U.S. government to clarify its position on use of the C-band spectrum and distribution of the potential revenues.

© 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.