L Brands notes eyed as new issue prices; American Airlines gains as demand strengthens

By James McCandless

San Antonio, June 4 – Distressed debt trading focused on the retail and airline sectors on Thursday.

L Brands, Inc.’s notes varied in direction as the company brought a new offering of five-year notes to market.

Party supplies retailer Party City Holdco Inc.’s issues also diverged.

In the airline space, American Airlines Group Inc.’s paper gained altitude as the company increases flights in anticipation of demand.

Sector peer United Airlines Holdings, Inc.’s notes were also on the rise.

Meanwhile, manufacturer Bombardier Inc.’s issues tracked higher despite news of layoffs in its regional rail segment.

Theater chain AMC Entertainment Holdings, Inc.’s paper saw mixed movements as it receives a ratings downgrade.

As oil futures continued to rise, Occidental Petroleum Corp.’s notes also gained. Meanwhile, Whiting Petroleum Corp.’s paper slipped.

L Brands, Party City eyed

L Brands’ notes varied in direction as Thursday came to an end, traders said.

The 5¼% senior notes due 2028 shed 3½ points to close at 85 bid. The 6 5/8% senior notes due 2021 picked up 3¼ points to close at 104 bid.

On Thursday, the Columbus, Ohio-based retailer priced $1.25 billion of five-year notes in a two-part Thursday drive-by, Prospect News reported.

The deal included $750 million of senior secured notes and $500 million of senior unsecured bullet notes.

The company reported in May that it had seen a wider-than-anticipated loss in the first quarter due to the coronavirus pandemic, which forced it to temporarily shutter its retail locations per government mandates.

The retailer posted a loss per share of 99 cents and net sales of $1.65 billion.

L Brands also announced that it would be closing 250 of its Victoria’s Secret locations.

Elmsford, N.Y.-based party supplies chain Party City’s issues also diverged.

The 6 1/8% senior notes due 2023 fell 1½ points to close at 17 bid. The 6 5/8% senior notes due 2026 rose ¾ point to close at 16¾ bid.

AA, United gain

In the airline space, American Airlines’ paper gained ground, market sources said.

The 5% senior notes due 2022 gained 2 points to close at 70 bid. The 3¾% senior paper due 2025 jumped up 8½ points to close at 63¾ bid.

Early Thursday, the Fort Worth-based airline announced that it would expand its flight schedule to meet expected traveler demand as coronavirus-related restrictions are lifted.

On its busiest days in July, the company expects to operate about 4,000 flights, up from its 2,300 estimate in June.

Most of the activity will be in domestic flights.

“The trading is mainly driven by optimism,” a trader said. “I’m not sure how reliable an indicator that is for recovery.”

Chicago-based sector peer United Airlines’ notes were also on the rise.

The 5% senior notes due 2024 grabbed 7¼ points to close at 87¼ bid. The 4¼% senior notes due 2022 shifted up 2¾ points to close at 86 bid.

Bombardier higher

Meanwhile, air and rail name Bombardier’s issues tracked higher, traders said.

The 7 7/8% senior notes due 2027 tacked on 1 point to close at 73 bid. The 7½% senior notes due 2025 picked up ½ point to close at 74½ bid.

The gains for the Montreal-based manufacturer came despite reports indicating that it plans to temporarily lay off 196 employees in its regional rail services division in Toronto.

The company said that the move is in response to a 90% decrease in rail ridership.

The issues were carried higher on Wednesday after the name announced it had closed a $550 million sale on its regional jet unit to Mitsubishi Heavy Industries Ltd.

Bombardier has recently brought production capacity back online in Canada and Europe as the pandemic forced business closures in March and April.

AMC mixed

Theater chain AMC’s paper saw mixed movements, market sources said.

The 5 7/8% senior subordinated notes due 2026 rose 2¾ points to close at 32 bid. The 10½% paper due 2025 shaved off ¼ point to close at 90¾ bid.

The Leawood, Kan.-based movie theater company received a slate of ratings downgrades from Moody’s Investors Service on Thursday.

The agency lowered the company’s corporate family rating, probability of default rating, speculative grade liquidity rating and several issue-level ratings.

Moody’s said that its lowered ratings on its senior subordinated paper reflect the increased likelihood of a distressed exchange and low recovery prospects as the company begins exchange offers.

AMC announced on Wednesday that it had started private exchange offers and related consent solicitations for four series of senior subordinated notes.

On offer are $640 million of new 12% cash/PIK second-lien secured notes due 2026 in exchange for the established subordinated notes.

Oil rises

Another day of rising oil futures was met with mixed results in the energy space, traders said.

West Texas Intermediate crude oil futures for July delivery garnered 12 cents to settle at $37.41 per barrel.

North Sea Brent crude oil futures for August delivery finished at $39.99 after a 20 cent pickup.

Houston-based independent oil and gas producer Occidental Petroleum’s notes matched the movements of futures.

The 2.9% senior notes due 2024 moved up 1 point to close at 83 bid. The 2.7% senior notes due 2022 inched up ¼ point to close at 94¼ bid.

Denver-based peer Whiting Petroleum’s paper slipped.

The 6 5/8% senior notes due 2026 chalked off ¾ point to close at 12¾ bid.

© 2015 Prospect News.
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