WeWork moderates; Transocean improves; Hertz gains; GTT, Frontier telecom bonds decline

By Cristal Cody

Tupelo, Miss., March 29 – WeWork Cos. LLC’s bonds softened modestly on Monday after climbing 7¾ points in heavy secondary activity ahead of the weekend.

WeWork’s 7 7/8% senior notes due 2025 (/CCC+/CC) were last seen trading at 99¾ bid on Monday, a source said.

The notes headed out Friday at 100 1/8 bid on more than $58.5 million of trading volume.

The bonds remain stronger compared to where the issue started the year in the 69 bid range.

WeWork announced Friday that it will merge with BowX Acquisition Corp. and become a publicly listed company in a transaction that values it at an initial enterprise value of approximately $9 billion.

The transaction will provide the New York City-based flexible office share company with about $1.3 billion of cash, as well as a $550 million senior secured notes facility provided by SoftBank Group Corp.

The merger is expected to close by the third quarter.

Transocean heads higher

Steinhausen, Switzerland-based offshore driller Transocean Inc.’s bonds traded higher over Monday’s session, a source said.

The company’s 8% senior notes due 2027 (Ca/CCC) were quoted up 1 point at 61½ bid.

Transocean’s 7½% notes due 2026 (Ca/CCC) rose more than 4 points to 65 1/8 bid.

Oil futures closed higher.

North Sea Brent crude oil futures for May deliveries added 41 cents to settle at $64.98 a barrel.

West Texas intermediate crude oil futures for May deliveries settled up 59 cents to $61.56 a barrel.

Overall market tone was mixed as the financial markets absorbed reports of potential major losses from banks including Nomura Holdings, Inc. and Credit Suisse Group AG due to the liquidation of more than $20 billion of shares from Archegos Capital Management.

Credit Suisse said in a news statement on Monday that a “significant U.S.-based hedge fund defaulted on margin calls made last week by Credit Suisse and certain other banks.”

Credit Suisse said it and a number of other banks are in the process of exiting the positions.

Nomura Holdings announced Monday that it plans to cancel the senior notes it priced on March 23 “due to an event that occurred after pricing that could impact the company’s consolidated financial results.”

In a separate statement on Monday, Nomura said an event occurred on Friday that could subject one of its subsidiaries to a significant loss.

The iShares iBoxx High Yield Corporate Bond ETF edged up 5 cents to $86.97.

Hertz better

In other distressed secondary trading, car rental company Hertz Corp.’s 5½% notes due 2024 hit 98¼ bid on Monday as the company nears exiting Chapter 11 bankruptcy, according to a market source.

The notes traded Friday up 2¼ points to 97¼ bid after trading 3 points higher in the prior session.

Hertz filed for Chapter 11 bankruptcy in May 2020.

On March 2, the Estero, Fla.-based car rental operator filed a joint Chapter 11 bankruptcy plan of reorganization and reported it received a $4.2 billion buyout offer from Knighthead Capital Management, LLC and Certares Opportunities LLC.

A hearing on the offer is scheduled for April 16 in the U.S. Bankruptcy Court for the District of Delaware.

GTT notes soften

In the distressed telecommunications space, GTT Communications, Inc.’s 7 7/8% senior notes due 2024 (/C/) traded Monday at 11 bid in thin secondary supply, a source said.

The notes have softened from the 20½ bid range in February and from the 40 bid range at the start of the year.

On March 8, Fitch Ratings downgraded the Tyson, Va.-based telecommunications and internet services provider to CC from CCC and withdrew the debt ratings.

The downgrade reflects Fitch's expectation that a restructuring or a distressed debt exchange is likely to occur in the next year.

S&P Global Ratings dropped the ratings on the company and its bonds on Feb. 23, noting that the company must work in good faith to enter an agreement with its lenders by Wednesday to reduce its leverage and extend a forbearance agreement from March 31 to Sept. 30.

The agreement could result in an exchange offer or restructuring, which S&P said it would likely view as tantamount to a default.

Moody’s Investors Service withdrew the ratings on the company on Dec. 15.

Frontier declines

Elsewhere in the telecom sector, bankrupt Frontier Communications Corp.’s 7 5/8% notes due 2024 fell 1½ points from Friday to the 63½ bid range in light secondary volume on Monday, a source said.

The Norwalk, Conn.-based company’s 11% notes due 2025 also dropped about ¼ point to 68 bid during the session.

Frontier plans to emerge from Chapter 11 bankruptcy early in 2021.

The company announced in January that it received approval from the Federal Communications Commission for its restructuring.

The U.S. Bankruptcy Court for the Southern District of New York confirmed the company’s plan of reorganization in August.

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