Oil names lifted as futures skyrocket; Frontier Communications mixed on interest payment

By James McCandless

San Antonio, Sept. 16 – The distressed debt market began a new week focused on turmoil in the global oil market.

As oil futures spiked on oil market news, California Resources Corp.’s, Chesapeake Energy Corp.’s and Whiting Petroleum Corp.’s notes were lifted.

Meanwhile, in telecom, trading in Frontier Communications Corp.’s notes varied in direction after the company said it would make debt payments.

Sector peer Intelsat SA’s paper also saw mixed movements.

After an industry giant filed for bankruptcy, Mallinckrodt plc’s notes rose while Teva Pharmaceutical Industries Ltd.’s issues diverged.

Utilities name PG&E Corp.’s paper dipped in the wake of its $11 billion insurance settlement news.

In retail, PetSmart, Inc.’s notes trended higher.

Oil names up

Distressed oil and gas names were lifted on Monday, traders said.

On Saturday, drone attacks on Saudi Arabian oil production facilities temporarily limited the country’s crude oil output.

Fears of a shortage of crude oil from one of the world’s major suppliers led to a spike in crude oil futures in Monday activity.

West Texas Intermediate crude oil futures for October delivery gained $8.05 to settle the day at $62.90 per barrel.

North Sea Brent crude oil futures for November delivery ended at $69.02 per barrel after a $8.80 jump.

“Energy names were all that anybody could focus on today,” a trader said. “It’s too soon to tell if we’re staying at these levels, but short sellers are lining up to take advantage.”

Los Angeles-based independent oil and gas producer California Resources’ notes shifted higher.

The 6% senior notes due 2024 rose 1¼ points to close at 50 bid. The 8% senior notes due 2022 shot up 8 points to close at 63 bid.

Oklahoma City-based oil and gas producer Chesapeake Energy’s issues also jumped.

The 8% senior notes due 2025 added 5½ points to close at 86 bid. The 8% senior notes due 2027 picked up 5¾ points to close at 83 bid.

Denver-based sector peer Whiting Petroleum’s paper followed the day’s trend.

The 6¼% senior paper due 2023 gained 6½ points to close at 86¼ bid. The 6 5/8% senior paper due 2026 was elevated by 6¼ points to close at 80¼ bid.

Frontier, Intelsat eyed

Meanwhile, in the telecom space, Frontier’s notes varied in direction, market sources said.

The 10½% senior notes due 2022 shaved off ¾ point to close at 55 bid. The 11% senior notes due 2025 improved by ¼ point to close at 53½ bid.

The Norwalk, Conn.-based wireline communications name announced on Monday that it would be making $320 million in debt payments, following concerns of nonpayment from the market.

“This was a decision point for them,” a trader said. “There was some debate this last week, but eventually it looked like this would happen.”

In the preceding weeks, the company said that it was considering several options to handle its maturities, including seeking bankruptcy protection.

Creditors have pressed the name to enact any restructuring outside of the court system.

Luxembourg-based satellite operator Intelsat’s issues also saw mixed movements.

Intelsat Jackson Holdings SA’s 5½% senior notes due 2023 edged up ¼ point to close at 93 bid. Intelsat (Luxembourg) SA’s 8 1/8% senior notes due 2023 shed 2¾ points to close at 82 bid.

Mallinckrodt rises

In the pharma space, Mallinckrodt’s paper was on the rise, traders said.

The 5½% senior notes due 2025 garnered ¾ point to close at 34¼ bid. The 4 7/8% senior notes due 2020 picked up ½ point to close at 76½ bid.

The Staines-upon-Thames, England-based drug maker’s structure saw positivity after industry peer Purdue Pharma filed for Chapter 11 bankruptcy on Sunday.

The most high-profile name in opioid-related litigation filed bankruptcy as a key part of its effort to settle more than 2,000 cases brought by cities and states across the country.

Mallinckrodt has been maneuvering in an attempt to prepare itself for future litigation, tapping the remaining amount on its credit facility and selling its contract drug manufacturing unit recently.

Petach Tikva, Israel-based Teva’s notes diverged.

The 2.8% senior notes due 2023 lost ¼ point to close at 84¼ bid. The 2.2% senior notes due 2021 added ¼ point to close at 94¼ bid.

PG&E dips

Utilities name PG&E’s bonds saw a dip, market sources said.

The 6.05% bonds due 2034 fell ½ point to close at 109½ bid.

On Friday, news broke that the San Francisco-based bankrupt electric utility had reached an $11 billion insurance subrogation settlement with insurance companies.

The claims stem from the 2017 and 2018 California wildfires that led to the company’s bankruptcy.

Settlements meant for victims directly are forthcoming.

PetSmart trends up

Retailer PetSmart’s paper moved on an upward trend, traders said.

The 8 7/8% senior notes due 2025 held level at 95 bid. The 5 7/8% paper due 2025 added ¼ point to close at 100 bid.

The Phoenix-based pet supplies retailer has seen positive trading on its structure after settling a dispute with its creditors over a private equity transfer of e-commerce arm Chewy.com.

After the dispute, the company oversaw an initial public offering for the segment in June.

© 2015 Prospect News.
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