Bombardier notes gain on regulatory news; American Airlines lower in travel space

By James McCandless

San Antonio, July 27 – As a new week opened up in the distressed debt market, the focus shifted to manufacturing and travel names.

Bombardier Inc.’s notes gained ground amid reports that European regulators will approve the company’s sale of its rail segment.

In the travel space, American Airlines Group Inc.’s issues were pushed lower despite receiving an analyst upgrade.

Sector peer United Airlines Holdings, Inc.’s paper varied in direction.

Meanwhile, communications name Sinclair Broadcast Group, Inc.’s notes were pushed into distressed territory as the coronavirus brought more uncertainty to the return of live sports.

Theater chain AMC Entertainment Holdings Inc.’s issues declined after giving final results for its four series exchange offer.

While oil futures were seen improving, Occidental Petroleum Corp.’s and SM Energy Co.’s paper diverged while Whiting Petroleum Corp.’s notes slipped.

Elsewhere, car rental name Hertz Global Holdings, Inc.’s issues were positive.

Bombardier improves

Bombardier’s notes gained ground by the end of Monday activity, traders said.

The 7 7/8% senior notes due 2027 gained ½ point to close at 75½ bid. The 8¾% senior notes due 2021 improved by ¾ point to close at 96¾ bid.

About $21 million was on the tape by the end of activity.

On Monday, reports indicated that E.U. regulators are set to approve the Montreal-based manufacturer’s sale of its rail division to Alstom.

The $8.2 billion deal was reached in February.

The company received a ratings downgrade from S&P Global Ratings on Friday.

The agency cut the unsecured notes rating.

S&P said that its change is reflective of Bombardier’s recent news that it obtained a commitment for a $1 billion secured term loan due 2023.

Airlines in focus

In the travel space, American Airlines’ issues were pushed lower, market sources said.

The 5% senior notes due 2022 shaved off ½ point to close at 59¾ bid. The 3¾% senior notes due 2025 gave up 1½ points to close at 45½ bid.

The Fort Worth, Tex.-based air carrier’s issues were under water despite early Monday news that an analyst at Raymond James raised the company’s rating.

In a note, the analyst said that a recent stock sell-off has begot a more balanced risk-reward scenario and that Chapter 11 bankruptcy would not be needed unless the recovery stalls over multiple years.

Last week, American Airlines reported a second-quarter loss per share of $7.82 and revenues of $1.62 billion.

“It won’t be a full recovery, but American should be in decent shape by the end of the year,” a trader said.

Chicago-based sector peer United Airlines’ paper varied in direction.

The 5% senior notes due 2024 were docked 1 point to close at 83 bid. The 4¼% senior notes due 2022 picked up 2½ points to close at 91 bid.

Sinclair down

Meanwhile, broadcaster Sinclair’s notes were pushed down, traders said.

Diamond Sports Group LLC’s 6 5/8% senior notes due 2027 gave up 1¾ points to close at 61½ bid. The 5 3/8% senior secured notes due 2026 shed 3¾ points to close at 83 bid.

The Hunt Valley, Md.-based diversified broadcaster’s notes were pushed further into distressed territory amid negative headlines about the return of live sports, which the company depends on for viewership.

News of a coronavirus outbreak within a Major League Baseball team have caused game delays and provoked questions about the reduced season.

Last week, Sinclair struck a multi-year renewal deal with Comcast for broadcast on 78 Sinclair stations, which included 20 Comcast sports channels.

AMC declines

Entertainment name AMC’s issues declined as the afternoon ended, market sources said.

The 5¾% senior subordinated notes due 2025 fell 1¼ points to close at 24¼ bid.

On Monday, the Leawood, Kan.-based movie theater chain announced the expiration and final results of its exchange offers and consent solicitations for four series of senior subordinated notes, Prospect News reported.

About $1.38 billion of the dollar-denominated notes were tendered for exchange while the £495.82 million was also tendered.

Under the terms of the offers, the company offered new 10%/12% cash/PIK toggle second-lien secured notes due 2026 in exchange for any and all of the existing notes.

Settlement is expected on July 31.

In the last week, the company has announced the delay of reopening its locations and was accused of being in default by a group of lenders.

Oil weaker

While oil futures were seen improving, distressed energy names weakened, traders said.

West Texas Intermediate crude oil futures for September delivery tacked on 31 cents to settle at $41.60 per barrel.

North Sea Brent crude oil futures for September delivery finished at $43.41 per barrel after a 7 cent gain.

Houston-based independent oil and gas producer Occidental Petroleum’s paper diverged in direction.

The 2.9% senior notes due 2024 shot up 1¼ points to close at 95 bid. The 2.7% senior paper due 2022 chalked off 1 point to close at 96 bid.

Denver-based producer SM Energy’s notes also saw mixed results.

The 6 1/8% senior notes due 2022 lost 1¾ points to close at 74 bid. The 6 5/8% senior notes due 2027 held level to close at 50 bid.

Whiting Petroleum, another Denver-based E&P, saw its issues slip.

The 6¼% senior notes due 2023 declined by 1 point to close at 19 bid. The 6 5/8% senior notes due 2026 dropped 1½ points to close at 19 bid.

Hertz positive

Elsewhere, car renter Hertz’s paper was positive, market sources said.

The 6¼% senior paper due 2022 jumped up 4½ points to close at 39½ bid. The 5½% senior paper due 2024 garnered 2½ points to close at 39½ bid.

The Estero, Fla.-based vehicle rental company received bankruptcy court approval of a temporary resolution of disputes related to its lease rejection motion.

The company has agreed to pay $650 million owed under a master lease agreement.

As part of the agreement, Hertz wills sell 182,000 lease vehicles and will pay regular rent on each car and a fee to cover depreciation.

© 2015 Prospect News.
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