Noble Energy bonds spike on merger with Chevron; Denbury stock gives back gains on “fraudulent” press release; Mitel loan moves up on asset sale news – Mid-Day Commentary
The market opened muted this morning as investors held steady waiting for vaccine manufacturers to testify before Congress on Tuesday (21 July), along with a host of companies reporting 2Q20 earnings this week.
Pharmaceutical companies Merck, Moderna, Pfizer, AstraZeneca and Johnson & Johnson are expected to take the stand in front of the House Committee of Energy and Commerce on Tuesday (21 July) and report their latest updates in the development of a COVID-19 vaccine.
Over the weekend, the coronavirus case and death count jumped once again in the US, with the total death toll topping 140,000. Florida saw an increase of more than 10,000 cases for a fifth straight day on Sunday. California’s cases rose by more than 9,300, while Texas rose by 7,300.
Chevron’s USD 5bn takeover offer for Noble Energy energized trading today in the energy sector, said a trader. The transaction values Noble at USD 10.38 per share with a USD 4.8bn market cap, compared to its USD 9.65 close on 17 July. Noble’s stock traded mid-day at USD 10.21 per share and a USD 4.90bn market cap.
Bonds for the BBB-/Baa3 rated Noble leapt on the news. Its USD 500m 3.25% senior unsecured notes due 2029 shot up to 111 this morning to yield 1.9% from the last institutional trade of 93.8 to yield 4% on 15 July, according to MarketAxess. Its USD 1bn 5.25% senior unsecured notes due 2043 skyrocketed to 134 to yield 3.1% from 93 and a yield of 5.7% on 15 July, according to MarketAxess.
While the company pulled earnings guidance earlier this year as a result of economic uncertainty brought by the coronavirus, it reported a war-chest of USD 1.4bn in cash and USD 3bn in undrawn revolver capacity at the end of 1Q20.
The transaction lifted other energy credits too, according to the trader. Occidental Petroleum’s USD 1.7bn 6.45% unsecured notes due 2036 firmed today to 94.75 to yield 6.9% up from 94 to yield 7% on Friday, according to MarketAxess.
Meanwhile, Matador Resources equity leapt 5% to USD 9.10 per share with a USD 1bn market cap. Its USD 1bn 5.875% unsecured note due 2026 traded up to 71.5 to yield 12.6% today, up from 71 to yield 12.8% on Friday’s close.
WPX Energy’s USD 600m 5.25% unsecured note due 2027 traded at par to yield 5.2%, up from 96 to yield 5.8% on Friday, according to MarketAxess. Its shares jumped 3% to USD 5.72 for a market cap of USD 3.2bn.
Separately, Denbury Resources stock jumped this morning on apparent news that the company had received an acquisition proposal – but the company subsequently released a statement saying the press release was fraudulent. Denbury said that it has not received any such proposal and reported the incident to the NYSE.
The initial release in question stated that the company received an official offer for USD 1.20 per share, or five times Friday’s close price. The alleged buyer was not revealed, but the release stated that “the agreement is expected to be successful.”
Denbury on 15 July announced it missed a coupon payment that was due to holders of its 4.625% senior subordinated notes. The company had already missed a payment on 30 June on its 6.375% convertible notes due 2024.
The company’s stock was up nearly 80% in premarket trading at 41 cents per share, before opening up 22.5% at USD 27 cents. Shares have settled at USD 24 cents and a market cap of USD 135.64m, up 6.6% from Friday’s close.
Denbury’s USD 455m 9.25% senior unsecured notes due 2022 ticked down to 41.938 today from trades at 42.375 on 8 July, according to MarketAxess.
Meanwhile, Mitel Networks’ debt jumped this morning on the news of the sale of its legacy VoIP asset for roughly USD 63m on Friday, reported by Debtwire on Friday (17 July). The telecommunications company sold the asset to Abry Partners and sponsor Searchlight Capital Partners and will use proceeds from the divestiture to improve its liquidity.
Its USD 260m L+ 675bps second lien term loan due 2026 climbed to 54.333/58.333 context, up from 47.188/53.96 level on 17 July, according to Markit.
TNT Crane’s debt softened on Friday (17 July) as the borrower inched closer to finalizing its restructuring support agreement terms under the bankruptcy process with its lenders, as reported.
Its USD 442.3m first lien loan due November 2020 was quoted in the 69.9/72.9 context on 17 July from 70.625/73.125 level on 16 July.
The RSA would involve a combination of equitization and take-back paper for first lien lenders, with TNT still negotiating with its ABL lenders as well.
The crane and rigging company has been operating under multiple forbearance agreements with its lenders and has retained FTI, Miller Buckfire and Simpson Thacher, as reported. For their part, a group of first lien lenders has organized with Gibson Dunn and Alvarez & Marsal, and a crossholder group of lenders has organized with Willkie Farr and Houlihan Lokey as advisor.
In new issuance, BBB Industries’ newly issued USD 240m 9.25% senior secured notes due 2025 traded up to 104 today after issuing at a 95 discount. Proceeds from the offering will be used to repay the issuer’s bridge facility and ABL borrowings.
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