California Resources notes in focus amid early tender results; Intelsat trades lower

By James McCandless

San Antonio, March 5 – Distressed debt trading focused on the energy and telecom spaces on Thursday.

California Resources Corp.’s notes varied in direction as the company released early results of its three-tranche tender offer.

As oil futures sputtered again, the negativity was felt in Valaris plc’s, Antero Resources Corp.’s and Gulfport Energy Corp.’s issues.

Telecom name Intelsat SA’s paper moved lower amid negative headlines concerning a share sale from two major holders.

Sector peer Frontier Communications Corp.’s notes also dipped.

Meanwhile, REIT Uniti Group Inc.’s issues were seen trailing, giving back some of the week’s gains.

In the pharma space, Mallinckrodt plc’s paper was dragged lower as the company grapples with a U.S. government lawsuit.

Generics maker Endo International plc’s notes saw a decline.

CalRes varies

California Resources’ notes varied in direction on Thursday, traders said.

The 6% senior notes due 2024 added ½ point to close at 22½ bid. The 8% senior secured notes due 2022 lost 2¼ points to close at 21 bid.

On Thursday, the Los Angeles-based independent oil and gas producer announced the early results of its offer to exchange three series of notes and related subscription offers, Prospect News reported.

As of the 5 p.m. ET early deadline on March 4, holders of $1,056,000,000 of the 8% notes, $32 million of the 5½% notes and $83 million of the 6% notes had participated in the exchange offer.

The offer includes the $1,808,327,000 outstanding 8% senior secured second-lien notes due 2022, the $99,996,300 outstanding 5½% senior notes due 2021 and the $144,279,000 outstanding 6% senior notes due 2024.

The offer is expected to close on March 18.

Oil sputters

As oil futures sputtered for another day, the negativity spread to distressed energy names, market sources said.

The prospect of an output cut from OPEC was outweighed by persistent demand worries.

West Texas Intermediate crude oil futures for April delivery shed 88 cents to settle at $45.90 per barrel.

North Sea Brent crude oil futures for May delivery ended at $49.99 per barrel after a $1.14 cut.

London-based contract driller Valaris’ issues moved in the same direction.

The 5.2% senior notes due 2025 were docked 1¾ points to close at 37¼ bid. The 7¾% senior notes due 2026 declined by 2¼ points to close at 37¼ bid.

Denver-based producer Antero Resources’ paper ended in a weaker position.

The 5 5/8% senior notes due 2023 slid 2 points to close at 59 bid. The 5 1/8% senior paper due 2022 was pushed down 2 points to close at 65½ bid.

Oklahoma City-based peer Gulfport Energy’s notes followed suit.

The 6% senior notes due 2024 lopped off ½ point to close at 38½ bid. The 6 3/8% senior notes due 2025 dived 4 points to close at 35½ bid.

Intelsat, Frontier lower

Telecom name Intelsat’s issues moved lower, traders said.

The 9½% senior notes due 2023 shaved off ¼ point to close at 55¾ bid. Intelsat (Luxembourg) SA’s 8 1/8% senior notes due 2023 declined by 1½ points to close at 36 bid.

The Luxembourg-based satellite operator’s structure was under water on Thursday amid headlines alleging that two large holders, BC Partners and Silver Lake Partners, sold off a block of stock before the shares dived last November.

“If I had to guess, it’s just people making noise because they’ve lost a lot of money for holding onto the stock,” a trader said.

Reports allege that the sales were made before a meeting between the company’s chief executive officer and a senior Federal Communications Commission official was made public.

Last week, the FCC voted on rules for a December C-band spectrum auction that includes the layout of revenue for sellers like Intelsat.

Norwalk, Conn.-based wireline communicator Frontier’s paper also dipped.

The 10½% senior notes due 2022 lost 2 points to close at 45 bid. The 11% senior notes due 2025 gave back 2¼ points to close at 43¾ bid.

Uniti trails

Meanwhile, property holder Uniti’s notes were seen trailing off of recent gains, market sources said.

The 7 7/8% senior secured notes due 2025 dipped ½ point to close at 105 bid. The 8¼% senior notes due 2023 fell 2 points to close at 94½ bid.

Wednesday saw a positive development for the Little Rock, Ark.-based real estate investment trust as S&P Global Ratings announced that it would place all of the company’s ratings on CreditWatch positive.

Spurred on by the company’s recent settlement with large customer Windstream, the agency said that the end of litigation brings more certainty to the question of the company’s ability to meet its financial commitments.

Mallinckrodt, Endo off

In the pharmaceuticals space, Mallinckrodt’s issues were dragged lower, traders said.

The 5¾% senior notes due 2022 shifted down 2¼ points to close at 70¾ bid. The 5½% senior notes due 2025 lost 4¼ points to close at 41½ bid.

This week, the Staines-upon-Thames, U.K.-based drug producer has been grappling with the news that the U.S. government has filed a lawsuit against its Mallinckrodt ARD LLC unit.

The government’s suit alleges that, through its artificial inflation of its best-selling Acthar Gel, the company defrauded Medicaid.

Dublin-based generics name Endo’s paper saw a decline.

The 6% senior paper due 2025 dropped 1¾ points to close at 77 bid. The 6% senior notes due 2023 shed 1¼ points to close at 82½ bid.

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