Occidental notes in focus after Q3 loss; Revlon notes strengthen in retail space

By James McCandless

San Antonio, Nov. 10 – Tuesday in the distressed debt market saw a focus on energy and retail names.

Occidental Petroleum Corp.’s notes varied in direction after the company reported a loss for the third quarter.

As oil futures made more gains, SM Energy Co.’s issues followed while Antero Resources Corp.’s and Transocean Ltd.’s paper saw pressure.

Meanwhile, in retail, Revlon, Inc.’s notes were boosted on reports that the company is considering an extension for a tender deadline.

Sector peer PetSmart, Inc.’s issues declined.

Coal producer Peabody Energy Corp.’s paper was gaining despite posting a third-quarter loss.

Elsewhere, software developer Exela Technologies, Inc.’s notes were trailing on the back of its earnings report.

Theater chain AMC Entertainment Holdings, Inc.’s issues built on gains made on Monday as the market latched onto optimism about development of a Covid-19 vaccine.

Occidental flat to lower

Occidental Petroleum’s notes varied in direction through Tuesday, traders said.

The 2.9% senior notes due 2024 sank 1 point to close at 91¾ bid. The 2.7% senior notes due 2022 held level to close at 97 bid.

After the close on Monday, the Houston-based independent oil and gas producer reported its results for the third quarter.

The company showed a loss of 84 cents per share, wider than the 70 cents per share loss that analysts were expecting.

Revenues were weaker than expected at $3.28 billion.

Concurrently, the company announced plans to keep strengthening its balance sheet by paying down debt, after extending the maturity of $5 billion of debt due in 2021 and 2023 by five to 10 years last quarter, Prospect News reported.

The company has reduced outstanding debt by $1.3 billion year to date and will use funds from expected asset sales to pay down debt.

Oil names diverge

As oil futures made more gains, distressed energy tranches were mostly pulled lower, market sources said.

West Texas Intermediate crude oil futures for December delivery reached up $1.07 to cap the day at $41.36.

North Sea Brent crude oil futures for January delivery ended at $43.61 per barrel after a $1.21 spike.

Denver-based producer SM Energy’s issues followed futures.

The 6 1/8% senior notes due 2022 pushed up 1½ points to close at 84½ bid. The 6¾% senior notes due 2026 tacked on 2¾ points to close at 44¾ bid.

Antero Resources, another Denver-based E&P company, saw its paper drop under pressure.

The 5 1/8% senior notes due 2022 fell 3 points to close at 93 bid. The 5% senior paper due 2025 slipped ½ point to close at 81 bid.

Steinhausen, Switzerland-based contract driller Transocean’s notes also moved on a negative track.

The 7½% senior notes due 2031 gave up ¼ point to close at 18¼ bid. The 7½% senior notes due 2026 declined 1½ points to close at 21½ bid.

Revlon improves

Meanwhile, in retail, Revlon’s issues were boosted, traders said.

The 5¾% senior notes due 2021 leaped up 19½ points to close at 55½ bid. The 6¼% senior notes due 2024 grabbed 3¼ points to close at 18½ bid.

During the Tuesday session, reports indicated that the New York-based cosmetics producer is considering extending the early tender deadline for its 5¾% notes.

Headlines also indicated that if not enough bondholders agree to the exchange, the company would file for Chapter 11 bankruptcy.

Revlon has reportedly tapped Alvarez & Marsal as advisers as it mulls the move.

“I would not be surprised if there was a filing soon,” a trader said.

Last week, the early tender deadline and withdrawal deadline were extended to 11:59 p.m. ET on Nov. 10, the expiration of the offer, from 11:59 p.m. ET on Nov. 5.

Phoenix-based sector peer PetSmart’s paper declined.

The 8 7/8% senior notes due 2025 shaved off ½ point to close at 100¾ bid. The 5 7/8% senior paper due lost ½ point to close at 101¾ bid.

Peabody positive

Coal producer Peabody Energy’s notes gained this session, market sources said.

The 6% senior notes due 2022 added ¼ point to close at 41 bid.

The slight gain in the St. Louis-based coal mining name’s structure came despite its underwhelming results for the third quarter.

The company reported a loss of 66 cents per share, higher than what analysts had expected at an 86 cents per share loss.

Revenues fell short of predictions at $671 million.

On Tuesday, Peabody Energy received a ratings downgrade from S&P Global Ratings.

The agency cut all of its ratings on Peabody Energy, including the issuer rating to CCC- from CCC+, and placed them on CreditWatch with negative implications.

S&P said that the downgrades were in response to the company’s warning about its ability to adhere to its financial covenants and remain a going concern.

Exela trails

Elsewhere, in software, Exela’s issues were trailing, traders said.

The 10% notes due 2023 slid 1 point to close at 31 bid.

The Irving, Tex.-based software developer released its earnings results for the third quarter after the close on Monday.

Regarding its earnings, the company reported a 20 cents per share loss.

Revenues were pegged at $305.3 million.

In July, the company announced the completed sale of its records storage unit for $12.3 million, continuing its effort to divest in non-core assets.

AMC gains

Theater chain AMC’s paper made more gains, market sources said.

The 10½% notes due 2025 moved up 3¾ points to close at 71¾ bid. The 12% notes due 2026 tacked on 1 point to close at 18½ bid.

For a second day, the Leawood, Kan.-based movie theater operator’s paper was improving on Monday’s news that pharmaceuticals name Pfizer Inc. had a candidate vaccine for Covid-19 that has been found to be more than 90% effective in clinical trials.

Over the last few months, AMC has been systematically reopening most of its locations that had been shuttered at the onset of the pandemic.

Consumer demand has yet to match AMC’s drive for business, reporting a Q3 loss of $5.70 per share and revenues of $119.5 million.

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