AMC Entertainment improves as new notes eyed; Frontier up despite ratings downgrade

By James McCandless

San Antonio, April 17 – As Friday wound down, the distressed debt space ended on the same optimistic note that was emblematic in the equities market.

AMC Entertainment Holdings, Inc.’s notes moved higher as the company prepared a new offering of five-year first-lien notes.

Elsewhere, wireline telecom name Frontier Communications Corp.’s issues improved despite receiving a ratings cut.

Sector peer Intelsat SA’s paper ended in a higher position.

Tobacco name Pyxus International, Inc.’s notes pushed upward in the midst of its own ratings downgrade.

Meanwhile, in oil and gas, Diamond Offshore Drilling, Inc.’s issues were under pressure after announcing that it would skip an interest payment.

As oil futures saw varied movements, Whiting Petroleum Corp.’s and Occidental Petroleum Corp.’s paper also diverged while Western Midstream Partners, LP’s notes gained.

Vehicle rental name Hertz Global Holdings, Inc.’s issues saw a modest rise as the company lobbies the government for a financial rescue package.

AMC higher

Entertainment name AMC’s notes moved higher on Friday, traders said.

The 5 7/8% senior subordinated notes due 2026 jumped up 10¼ points to close at 31½ bid. The 6 1/8% senior subordinated notes due 2027 added 9 points to close at 32 bid.

Both tranches combined saw about $12 million change hands.

The Leawood, Kan.-based movie theater chain saw its structure active in the run up to the company’s offering of new five-year first-lien notes.

After the close, the company priced a $500 million issue of 10½% five-year first-lien notes (B3/CCC+) at 98 to yield 11.031%, Prospect News reported.

The company said that the offering was intended to provide it with liquidity to weather the coronavirus pandemic, which has forced its locations to close after governments implemented closures of non-essential businesses.

During the Friday session, Moody’s Investors Service lowered AMC’s corporate family rating and probability of default rating.

The agency cited the company’s higher leverage profile as a result of the new offering.

Frontier, Intelsat improve

Elsewhere, telecom name Frontier Communications’ issues improved, market sources said.

The 10½% senior notes due 2022 gained ¼ point to close at 31¼ bid. The 11% senior notes due 2025 improved by ¾ point to close at 31¾ bid.

By the close, the Norwalk, Conn.-based bankrupt wireline communications name’s issues strengthened despite an early morning ratings downgrade from Moody’s.

The agency downgraded the company’s probability of default rating, corporate family rating and issue-level ratings.

Moody’s said that the outlook remains negative and it will withdraw its ratings due to this week’s bankruptcy filing.

Frontier moved to Chapter 11 after reaching a restructuring agreement with its creditors that would see its debt slashed by more than $10 billion.

“Everything was caught up in optimism today,” a trader said. “But I think this is the pattern that’s going to repeat for a while. There will be some volatility that ends with an upswing.”

Luxembourg-based satellite operator Intelsat, which had its own tumultuous week as it weighs its own bankruptcy, saw its paper end higher.

Intelsat Jackson Holdings SA’s 5½% senior notes due 2023 rose ½ point to close at 63 bid. The 8½% senior paper due 2024 tacked on 1¾ points to close at 65¼ bid.

Pyxus up

Tobacco name Pyxus’ notes pushed upward by the end of the session, traders said.

The 9 7/8% notes due 2021 were lifted ½ point to close at 18½ bid.

Toward the end of the day, the Morrisville, N.C.-based tobacco products producer received its own ratings downgrade.

Moody’s slashed the company’s corporate family rating, probability of default rating, revolving credit facility rating and issue-level rating.

The outlook was changed to negative from stable.

The agency listed a litany of reasons, notably the name’s continuously weakening liquidity position, refinancing delay, and difficulty in obtaining tobacco leaf to process as the coronavirus outbreak hampers supply chains.

Diamond Offshore down

Meanwhile, in the oil and gas space, Diamond Offshore’s issues were under pressure, market sources said.

The 5.7% senior notes due 2039 dipped 1¼ points to close at 12½ bid. The 4 7/8% senior notes due 2043 shed ¾ point to close at 13 bid.

Late Thursday, the Houston-based contract driller became one of the latest in a string of companies to forego an interest payment.

In the company’s case, the payment was due April 15 for the 2039 notes.

Diamond Offshore said in a Securities and Exchange Commission filing that it had hired Lazard as an adviser while the company considers financial alternatives.

In reaction to the news, S&P Global Ratings slashed Diamond Offshore’s issuer credit rating and senior unsecured rating to CC from CCC+, citing a strong likelihood of a selective default or a bankruptcy filing.

Oil varies

As oil futures saw varying movements, energy tranches were also non-cohesive, traders said.

West Texas Intermediate crude oil futures for May delivery fell $1.60 to finish the week at $18.27 per barrel.

North Sea Brent crude oil futures for June delivery ended at $28.08 per barrel after a 26 cent pickup.

Denver-based independent oil and gas producer Whiting Petroleum’s paper diverged.

The 6¼% senior notes due 2023 tacked on ¼ point to close at 10¼ bid. The 6 5/8% senior notes due 2026 declined by ¼ point to close at 8¾ bid.

Houston-based producer Occidental Petroleum’s notes also saw mixed activity.

The 2.9% senior notes due 2024 dipped 1¼ points to close at 71¼ bid. The 2.7% senior notes due 2022 added ½ point to close at 83 bid.

Houston-based pipeline name Western Midstream’s notes gained.

The 5.3% senior notes due 2048 picked up ½ point to close at 72 bid.

Hertz rises

Rental name Hertz’s paper saw a modest rise, market sources said.

The 5½% senior notes due 2024 pushed up 4½ points to close at 46 bid. The 6¼% senior paper due 2022 tacked on 1¾ points to close at 53 bid.

On Friday, the Estero, Fla.-based vehicle rental company’s structure made a modest recovery after Thursday’s crash.

The drop was precipitated by news that the name is lobbying for a financial rescue package from the U.S. government.

Hertz has seen significantly reduced business as Covid-19 reduces the public’s ability to travel.

© 2015 Prospect News.
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