Intelsat improves as spectrum payout delayed; Superior Energy jumps on transaction news

By James McCandless

San Antonio, Dec. 18 – Developments in the utilities and energy sectors took up much of the focus in the day’s distressed market.

Intelsat SA’s notes improved as news broke that the Federal Communications Commission is tasked with deciding on the terms of its spectrum compensation.

Sector peer Frontier Communications Corp.’s issues were under pressure.

Elsewhere, in oil and gas, Superior Energy Services, Inc.’s paper jumped up after announcing a divestiture as part of a strategic transaction.

As oil futures moved differently, Whiting Petroleum Corp.’s notes gained while Valaris plc’s issues diverged and California Resources Corp.’s paper dipped.

Meanwhile, in utilities, PG&E Corp.’s notes declined as its settlements with wildfire victims and insurance providers were approved in bankruptcy court.

Retailer Bed Bath & Beyond Inc.’s issues saw mixed movements a day after the company announced several executive departures.

Coworking name WeWork Cos. Inc.’s paper slipped as the company secured a credit line from Goldman Sachs.

Intelsat up, Frontier worse

Intelsat’s notes were improving throughout the Wednesday session, traders said.

Intelsat (Luxembourg) SA’s 8 1/8% senior notes due 2023 added 4¼ points to close at 55¼ bid. The 9½% senior notes due 2023 jumped up 5½ points to close at 68 bid.

About $65 million of the notes were on the tape.

On Wednesday, news broke that legislation meant to benefit the Luxembourg-based satellite operator and others in an auction of C-band spectrum has lost support in Congress.

A bill that would have split the expected $40 billion in proceeds from a potential auction between satellite names and the Treasury has failed to make it into a year-end funding package, losing bipartisan support.

Now the decision on if to compensate the companies and how much falls to the FCC, which decided recently to hold a public auction despite lobbying efforts from the C-Band Alliance.

“They lose out on a potential for billions in revenue, which they would like to help with their debt problem,” a trader said.

Norwalk, Conn.-based wireline communications name Frontier’s issues were under pressure.

The 10½% senior notes due 2022 shaved off ½ point to close at 46½ bid. The 11% senior notes due 2025 lost ¾ point to close at 46¼ bid.

Superior Energy jumps

Elsewhere, in oil and gas, Superior Energy’s paper jumped up, market sources said.

The 7 1/8% senior notes due 2021 hopped up 6¼ points to close at 86½ bid. The 7¾% senior notes due 2024 improved by 5½ points to close at 66¾ bid.

The Houston-based oilfield services provider announced its plan to divest its U.S. operations, combining them with peer Forbes Energy Services to create a new public entity.

After the deal closes in early 2020, the company expects to retain at 65% non-controlling stake in the new firm, made up of 49.9% of class A common stock and 100% class B non-voting stock.

Concurrently, in connection with the transaction, the company said that it would reduce the amount of its outstanding 2021 paper by $500 million.

Oil space varies

As oil futures moved in different directions, distressed sector tranches varied in direction, traders said.

A drop in U.S. crude inventories spurred small gains for crude futures.

West Texas Intermediate crude oil futures for January delivery shaved off 1 cent to settle at $60.93 per barrel.

North Sea Brent crude oil futures for February delivery landed at $66.17 per barrel after a 7 cent rise.

Denver-based independent oil and gas producer Whiting Petroleum’s notes gained.

The 6¼% senior notes due 2023 tacked on 1 point to close at 84½ bid. The 6 5/8% senior notes due 2026 shifted up ½ point to close at 70¼ bid.

London-based contract driller Valaris’ issues diverged.

The 5.2% senior notes due 2025 garnered ¾ point to close at 55¼ bid. The 7¾% senior notes due 2026 shed ¼ point to close at 56¼ bid.

Los Angeles-based producer California Resources’ paper dipped.

The 6% senior notes due 2024 fell ¾ point to close at 33¼ bid. The 8% senior secured notes due 2022 lost 1 point to close at 42 bid.

PG&E negative

Meanwhile, in utilities, PG&E’s notes declined, market sources said.

The 6.05% notes due 2034 shed ½ point to close at 105½ bid.

Early Wednesday, news broke that the judge in the San Francisco-based electric utility’s bankruptcy case approved the company’s $13.5 billion settlement with wildfire victims and its $11 billion settlement with insurers.

Before the approvals, the parties involved in the settlements amended the agreements to remove a clause that required California governor Gavin Newsom’s approval following his objection to the agreements.

The company is still working to submit a revised restructuring plan, which requires the approval of the governor-appointed Public Utilities Commission.

In recent weeks, the utility and the governor have been at odds, tussling over his desire to increase state oversight in various areas.

Bed Bath mixed

Retailer Bed Bath & Beyond’s long-term issues saw mixed movements, traders said.

The 5.165% senior notes due 2044 slipped 1¼ points to close at 72 bid. The 4.915% senior notes due 2034 picked up 1¾ points to close at 77 bid.

The Union, N.J.-based retail chain’s structure saw heightened attention after announcing that six senior executives had departed the company.

Among the resignations were the chief marketing officer and chief merchandising officer.

Continuing pressure to execute a turnaround from an activist investor led to a chief executive officer change earlier in the year.

WeWork off

Startup WeWork’s paper slipped by the end of the session, market sources said.

The 7 7/8% senior notes due 2025 declined by ¼ point to close at 81½ bid.

After the close on Tuesday, the New York-based coworking company announced that it had arranged a $1.75 billion letter of credit with Goldman Sachs.

Part of its $9.5 billion rescue financing package from SoftBank, the funds are expected to become available in January.

The paper fell into distressed territory in October after a mishandled initial public offering reduced its valuation and led to the exit of CEO Adam Neumann.

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