GTT notes jump on asset sale news; Transocean paper trades mixed in energy space

By James McCandless

San Antonio, Sept. 8 – At the beginning of a holiday-shortened week, the distressed debt market honed in on the telecom and energy sectors.

GTT Communications, Inc.’s notes jumped upward after news broke that it was nearing a deal to sell about $2 billion in assets.

Sector peer Intelsat SA’s issues saw a divergence.

Meanwhile, in oil and gas, Transocean Ltd.’s paper varied in direction after extending an exchange offer.

As oil futures took a tumble, Occidental Petroleum Corp.’s and Valaris plc’s notes followed while Antero Resources Corp.’s issues saw mixed results.

Movie theater chain AMC Entertainment Holdings, Inc.’s paper was active but rigid amid negative headlines.

Elsewhere, United Airlines Holdings, Inc.’s and American Airlines Group Inc.’s notes moved on different tracks.

GTT improves

GTT Communications’ notes jumped upward to start the week, traders said.

The 7 7/8% senior notes due 2024 pushed higher by 13¼ points to close at 50¼ bid.

On Tuesday morning, news broke that the McLean, Va.-based cloud networking services provider is close to closing a deal with a consortium of buyers to sell its European fiber assets.

Macquarie Group Ltd., 3i Group plc and AustralianSuper are in advanced negotiations to buy the assets for more than $2 billion.

“Whether it comes to fruition or not, it’s generating a lot of positive interest,” a trader said. “I think for the short term, those bonds will stay in the 50’s.

Last month, S&P Global Ratings and Fitch Ratings placed the company’s ratings on watch with negative implications over problems with financial reporting.

The shifts were prompted after GTT said that its second-quarter earnings report would be delayed after the discovery of issues related to recording and reporting telecommunications costs and “related internal controls.”

Separately on Tuesday, Luxembourg-based sector peer Intelsat’s issues saw a divergence.

Intelsat Jackson Holdings SA’s 5½% senior notes due 2023 held level to close at 65 bid. The 8% notes due 2024 shaved off ¼ point to close at 101¾ bid.

Transocean varies

Meanwhile, in the oil and gas space, Transocean’s paper was flat to higher.

The 7½% senior paper due 2031 tacked on ½ point to close at 18 bid. The 6 1/8% senior secured paper due 2025 closed level at 88½ bid.

The Steinhausen, Switzerland-based contract driller announced that wholly owned subsidiary Transocean Inc. received over $1.5 billion of validly tendered exchange notes as of Sept. 4 under its previously announced offers to exchange some existing notes for up to $750 million of new 11½% senior guaranteed notes due 2027, Prospect News reported.

After some attempts to block the exchange offers, Transocean intends to proceed further, including extending the deadline.

Now the offers are set to expire at 5 p.m. ET on Sept. 9.

The offers were announced last month.

Oil tumbles

As crude oil futures took a tumble, distressed energy names took the same cue, traders said.

West Texas Intermediate crude oil futures for October delivery dived $3.01 per barrel to settle at $36.76 per barrel.

North Sea Brent crude oil futures for November delivery finished at $39.78 per barrel after a $2.88 dip.

Prices took a fall after Saudi Arabia’s Aramco said that it would reduce the official selling prices for its oil amid persistent low demand.

Houston-based independent oil and gas producer Occidental Petroleum’s notes followed the path laid out by oil futures.

The 2.9% senior notes due 2024 gave up 1¾ points to close at 89¼ bid. The 2.7% senior notes due 2022 were pushed down 1½ points to close at 96¾ bid.

London-based driller Valaris’ issues moved similarly.

The 5.2% senior notes due 2025 lost chalked off ½ point to close at 7 bid. The 7¾% senior notes due 2026 drifted 1¼ points lower to close at 6 bid.

Denver-based producer Antero Resources’ paper saw mixed results.

The 5 1/8% senior notes due 2022 picked up 1¼ points to close at 86 bid. The 5 5/8% senior notes due 2023 moved down 1 point to close at 78 bid.

AMC active, flat

Theater chain AMC’s notes were active but ultimately unchanged by the end of the afternoon, market sources said.

The 12% notes due 2026 closed level at 42 bid. The 10½% notes due 2025 closed level at 91 bid.

The two tranches saw about $10 million on the tape as the session concluded.

As Tuesday’s session got underway, the Leawood, Kan.-based movie theater operator’s structure saw pressure under the weight of negative headlines about this past weekend’s box office results.

After the release of the anticipated film Tenet only grossed $20 million over the three-day weekend, the market expressed fresh concerns about the industry.

“The demand just isn’t there right now,” a trader said. “Plus, they’re being undercut by studios putting movies online.”

Last week, the company reopened 70% of its locations after prolonged closures due to the coronavirus pandemic.

Airlines active

Elsewhere, United Airlines’ issues moved on different tracks, traders said.

The 5% senior notes due 2024 grabbed ¾ point to close at 91 bid. The 4¼% senior notes due 2022 fell 1¾ points to close at 92¾ bid.

Late last week, the Chicago-based carrier announced that it would increase its domestic and international flight schedules in October.

The company will fly 40% of its full schedule, representing an expected 6% bump up from what it expects from September.

The move will bring the name to 40% of its full schedule.

As the industry waits for the federal government to approve a second round of payroll aid, companies have outlined thousands of jobs for furloughs and layoffs.

Fort Worth-based peer American Airlines’ paper also saw activity.

The 5% senior paper due 2022 garnered 2½ points to close at 68 bid. The 11¾% senior notes due 2025 shed 1 point to close at 97½ bid.

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