PG&E notes gain as financing plans released; Hertz paper spikes on recovery hopes

By James McCandless

San Antonio, June 8 – The distressed debt space marked Monday with large swaths of positivity as the market bet on a swift recovery.

PG&E Corp.’s notes were seen gaining after the company released its plans for funding its end-of-June bankruptcy exit.

Elsewhere, Hertz Global Holdings, Inc.’s issues spiked as the market pinned its hopes on a speedy economic recovery from the coronavirus.

Real estate name Realogy Holdings Corp.’s paper saw varying movements as the company prepares a new issue.

Despite a dip in oil futures, developments from OPEC drove up Occidental Petroleum Corp.’s, Chesapeake Energy Corp.’s and Whiting Petroleum Corp.’s notes.

As travel restrictions are eased, United Airlines Holdings, Inc.’s issues were positive while American Airlines Group Inc.’s paper diverged.

In the retail space, L Brands, Inc.’s established notes picked up steam as newer issues made their mark on trading.

PG&E gains

During the Monday session, PG&E’s notes were seen gaining, traders said.

The 6.05% senior notes due 2034 rose ½ point to close at 118½ bid.

On Monday morning, the San Francisco-based electric utility said that it expects to pursue underwritten public offerings of common stock and equity units as part of its plan to fund its emergence from Chapter 11, Prospect News reported.

The offerings are expected to generate $5.75 billion in gross proceeds, which it expects to combine with $3.25 billion of proceeds from private sales of common stock to fund its reorganization plans.

The equity units are expected to consist of two components, including a prepaid forward purchase contract to purchase common stock and an undivided beneficial interest in specified U.S. treasury securities.

News of the financing package broke late last week, following a California regulator’s decision to approve the company’s restructuring plan.

Hertz spikes

Elsewhere, rental name Hertz’s issues spiked during the day, market sources said.

The 6¼% senior notes due 2022 gained 5¼ points to close at 40 bid. The 5½% senior notes due 2024 added 5¾ points to close at 40½ bid.

The Estero, Fla.-based car rental company’s structure, along with its common stock, saw spikes as the market continued to bet on a speedy economic recovery from the damage done by the coronavirus pandemic.

Last week, as many states lift government restrictions, travel names were seen improving on positive economic data and a better outlook on demand in the short-term.

“Everything’s up,” a trader said. “It’s almost enough to make you forget the bankruptcy.”

Realogy varies

Property name Realogy’s paper saw varying movements, traders said.

The 4 7/8% senior notes due 2023 tacked on ½ point to close at The 9 3/8% senior notes due 2027 chalked off ¾ point to close at 95½ bid.

During the Monday session, the Madison, N.J.-based real estate services name announced that its indirect, wholly owned subsidiary Realogy Group LLC is planning a new offering of $400 million of senior secured second-lien notes due 2025, Prospect News reported.

Concurrently, the company plans to use the proceeds to redeem its $400 million of 5¼% senior notes due 2021.

Moody’s Investors Service described the new issuance as a “positive liquidity development,” though a “negative credit development.”

Oil names up

Despite a dip in oil futures, distressed energy names were driven up, market sources said.

Distressed tranches ended in better positions after OPEC agreed to further supply cuts to support prices caused by low demand.

West Texas Intermediate crude oil futures for July delivery gave up $1.36 to finish at $38.19 per barrel.

North Sea Brent crude oil futures for August delivery settled at $40.80 per barrel after a $1.50 slip.

Houston-based independent oil and gas producer Occidental Petroleum’s notes shifted upward.

The 2.9% senior notes due 2024 improved by 2½ points to close at 87¼ bid. The 2.7% senior notes due 2022 gained ¼ point to close at 95¾ bid.

Oklahoma City-based producer Chesapeake Energy’s issue followed the trend.

The 11½% notes due 2025 shot up 3½ points to close at 8½ bid. The 8% senior notes due 2025 rose 1 point to close at 4 bid.

Denver-based peer Whiting Petroleum’s paper moved upward.

The 6¼% senior notes due 2023 picked up 4¾ points to close at 20 bid. The 6 5/8% senior paper due 2026 grabbed 3 points to close at 19¼ bid.

United Airlines rises

Meanwhile, air travel name United Airlines’ notes were positive, traders said.

The 5% senior notes due 2024 improved by 3½ points to close at 91¾ bid. The 4¼% senior notes due 2022 gained ½ point to close at 91½ bid.

The Chicago-based airline was another name in the travel sector to benefit from positive sentiment in the market as travel restrictions across the country are lifted and travel companies project increased demand in domestic flights.

“There’s a few issues that could be troubling in the future,” a trader said. “There could be a second wave. The international side could continue to be slow.”

Fort Worth-based peer American Airlines’ issues diverged in direction.

The 5% senior notes due 2022 shaved off ½ point to close at 77 bid. The 3¾% senior notes due 2025 rose by ¾ point to close at 68¾ bid.

L Brands better

In the retail space, L Brands’ paper picked up steam, market sources said.

The 6¾% senior notes due 2036 pushed up 2¾ points to close at 89½ bid. The 5¼% senior paper due 2028 inched up ¼ point to close at 92 bid.

The Columbus, Ohio-based retail company’s established tranches were active as new issues hit the market on Friday.

After the Thursday close, the company priced $750 million of senior secured notes and $500 million of senior unsecured bullet notes.

© 2015 Prospect News.
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