PG&E trades higher as company seeks creditor deal; EQT notes down on impairment charge

By James McCandless

San Antonio, Jan. 14 – The distressed debt market fixed its attention on shifting ground in the utilities and energy spaces.

PG&E Corp.’s notes tracked higher amid news that the company is in negotiations with creditors to reach a compromise restructuring plan.

In oil and gas, EQT Corp.’s issues were under pressure after announcing that it would take a noncash impairment charge of at least $1.4 billion for the fourth quarter.

Gains for oil futures spurred similar movements from Range Resources Corp.’s and Southwestern Energy Co.’s paper while Whiting Petroleum Corp.’s notes varied.

Meanwhile, in pharma, Mallinckrodt plc’s issues improved a day after the company touted its debt reduction in 2019.

Sector peer Endo International plc’s notes also saw gains by the close.

Wireline communicator Frontier Communications Corp.’s notes were active but unchanged on the eve of an interest payment date.

Mobile network name Digicel Ltd.’s issues rose.

PG&E higher

PG&E’s notes tracked higher by the end of the day, traders said.

The 6.05% notes due 2034 added 2 points to close at 111½ bid.

About $65 million of the notes traded by the end of the afternoon.

On Tuesday afternoon, news broke that the San Francisco-based bankrupt electric utility is working toward a compromise restructuring deal with a group of creditors led by PIMCO and Elliott Management.

In exchange for the group shelving an alternative restructuring plan, the company would give them a combination of equity and new debt.

“The bondholders are going to be happy with any equity they are able to get,” a trader said. “It’s the only reason they’ve been making all of the noise.”

A lawyer for the name told a bankruptcy court judge that the talks were ongoing and constructive.

The company’s structure saw positivity on Monday after announcing that it could save about $470 million in taxes as a result of a $1.68 billion settlement with California.

EQT down

In the oil and gas space, EQT’s issues were under pressure, market sources said.

The 3.9% senior notes due 2027 dipped 1 point to close at 88½ bid.

Early Tuesday, the Pittsburgh-based natural gas producer stated in a Securities and Exchange Commission filing that it would take a noncash impairment charge of $1.4 billion to $1.8 billion for the fourth quarter.

The company cited weakness in natural gas prices, potential asset sales and changes to its core strategies.

“It’s not the weakest name in the space, but it’s just another example of the thin ice these names find themselves on,” a trader said.

The company also announced a reduction in its 2020 development budget.

Oil trends up

As oil futures gained, distressed energy names trended upward, traders said.

Markets turned their attention to the impending signing of a preliminary trade deal between the United States and China, leading to stronger oil futures.

West Texas Intermediate crude oil futures for February delivery added 15 cents to finish at $58.23 per barrel.

North Sea Brent crude oil futures for March delivery settled at $64.49 per barrel after a 29 cent pickup.

Fort Worth-based independent oil and gas producer Range Resources’ paper gained.

The 4 7/8% senior notes due 2025 picked up ¾ point to close at 86½ bid.

Spring, Tex.-based peer Southwestern Energy’s notes followed the sector trend.

The 7½% senior notes due 2026 garnered 1 point to close at 91½ bid.

Denver-based producer Whiting Petroleum’s issues varied through the day.

The 6¼% senior notes due 2023 rose ½ point to close at 85¾ bid. The 6 5/8% senior notes due 2026 fell 1 point to close at 67 bid.

Mallinckrodt, Endo improve

Meanwhile, in pharma, Mallinckrodt’s paper improved, market sources said.

The 4 7/8% senior notes due 2020 picked up 2½ points to close at 76 bid. The 5¾% senior paper due 2022 gained 1¾ points to close at 41¾ bid.

The Dublin-based drug producer’s paper has seen positivity over the last few trading days after the company touted its debt reduction work in 2019 at a Monday conference.

Dublin-based generic drugmaker Endo’s notes also gained.

The 6% senior notes due 2025 shot up 2 points to close at 73½ bid. The 6% senior notes due 2023 rose 3½ points to close at 80 bid.

Both companies have seen their structures pushed further into distressed trading as legal entanglements over the opioid epidemic piled up in 2019.

Frontier flat

Telecom company Frontier’s issues were active but ultimately unchanged, traders said.

The 10½% senior notes due 2022, reaching up to 45¼ bid during the day, held level at 45 bid. The 11% senior notes due 2025 closed level at 45 bid.

The Norwalk, Conn.-based wireline communications name’s structure maintained its high levels of activity on the eve of a number of interest payments coming due.

The market has been watching for the company to commence a restructuring for the last few months.

Kingston, Jamaica-based mobile phone network provider Digicel’s paper rose.

The 6% senior notes due 2021 picked up 2 points to close at 84½ bid.

© 2015 Prospect News.
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