PG&E High-Interest Bonds Gyrate After Fire Victim Settlement - The Wall Street Journal

A firefighter searches the perimeter of a burning building during the Kincade Fire in Healdsburg,... — A firefighter searches the perimeter of a burning building during the Kincade Fire in Healdsburg, Calif., in October. Photo: Phil Pacheco/Bloomberg News

Matt Wirz

The Wall Street Journal

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matthieu.wirz@wsj.com

Updated Dec. 9, 2019 5:42 pm ET

Prices of PG&E Corp. ’s high-interest bonds whipsawed Monday, the first trading day since the bankrupt California utility announced Friday a settlement with wildfire victims that has weakened efforts by bondholders to take over the company.

PG&E’s 6.05% bond due 2034 initially dropped, reflecting uncertainty about a legal argument pursued by bondholders to boost the value of their claims, before surging in tandem with a rally in the company’s stock price.

PG&E’s 6.05% bond due 2034 dipped as low as 103.75 cents on the dollar Monday, from about 104.50 Friday, then rebounded to close around 106, according to data from MarketAxess.

The company’s stock jumped 16% to approximately $11.18.

Bondholders, which include Elliott Management Corp. and Pacific Investment Management Co., are scheduled to argue in San Francisco bankruptcy-court hearings this month and next that PG&E should pay them accrued interest at the original contract interest rate of their notes rather than the federal judgment rate of about 3%.

In emerging markets, Ukraine government bonds rose on increased optimism about an international financing package for the country. IMF Managing Director Kristalina Georgieva issued a statement Saturday pledging support for Ukraine’s policy agenda “including with a new IMF-supported program,” subject to approval by the Fund’s management.

Ukraine’s 7.375% sovereign bond due 2032 climbed to about 104.5 cents on the dollar Monday from roughly 102 last week, according to MarketAxess.

U.S. government bond yields fell this morning amid mounting investor concern about U.S. tariffs on Chinese goods scheduled to take effect this month. The yield of the 10-year Treasury fell to 1.829% Monday from a close of 1.842% Friday.

The WSJ Dollar Index, which measures the U.S. currency against a basket of 16 others, was unchanged at 90.62.