Transocean eyed as exchange offers get underway; Hertz notes trade lower in secondary

By James McCandless

San Antonio, Aug. 12 – Keeping up the trend established earlier in the week, the distressed space continued to focus on the energy and travel sectors.

Transocean Ltd.’s notes varied in direction as a ratings agency put the company on notice after commencing exchange offers for 11 series of notes.

Sector peer Occidental Petroleum Corp.’s issues were under pressure after starting an exchange offer of its own.

Oil futures were carried higher, followed by SM Energy Co.’s paper while Whiting Petroleum Corp.’s notes diverged.

Elsewhere, Hertz Global Holdings, Inc.’s issues drifted lower after news that it was approved to use cash collateral to repay its sidecar loan.

Manufacturer Bombardier Inc.’s paper weakened despite news that it won a rail contract in Spain.

REIT Washington Prime Group, Inc.’s notes improved a few days after releasing its second-quarter earnings report.

Property name CBL & Associates Properties, Inc.’s issues ended with mixed results.

Software developer Exela Technologies, Inc.’s paper picked up steam after issuing its Q2 report on Monday.

Transocean varies

Transocean’s notes varied in direction on Wednesday, traders said.

The 6½% senior notes due 2020 moved up 4½ points to close at 99½ bid. The 7½% senior notes due 2031 declined by ¾ point to close at 28½ bid.

During the day’s activity, S&P Global Ratings affirmed its CCC+ ratings for the Steinhausen, Switzerland-based contract driller’s unsecured guaranteed debt and CCC issue-level ratings on its senior unsecured debt.

Nearly all of the unsecured debt ratings were placed on CreditWatch with negative implications.

On Monday, wholly owned subsidiary Transocean Inc. began offers to exchange 11 series of existing notes for up to $750 million of new notes, Prospect News reported.

The offers will expire at 11:59 p.m. ET on Sept. 4.

S&P considers the offer a distressed exchange.

Occidental down

Sector peer Occidental Petroleum’s issues were under pressure, market sources said.

The 2.9% senior notes due 2024 fell 2¾ points to close at 91¾ bid. The 2.7% senior notes due 2022 were docked ¼ point to close at 96¾ bid.

On Wednesday, the Houston-based independent oil and gas producer launched offers to purchase for cash up to $1.5 billion of eight series its outstanding senior notes and launched related consent solicitations, Prospect News reported.

The total consideration for each series of notes includes an early tender premium of $50 per $1,000 of notes.

The offer expires on Sept. 9.

To fund the offer, the company priced an upsized $3 billion of senior notes in three bullet tranches. The issuance was increased from an originally planned $1.5 billion.

Oil higher

As oil futures were carried higher, distressed energy tranches followed the trend, traders said.

West Texas Intermediate crude oil futures for September delivery jumped up $1.06 to end the day at $42.67 per barrel.

North Sea Brent crude oil futures for October delivery closed at $45.43 per barrel after a 93 cent pickup.

Denver-based producer SM Energy’s paper moved the same way as futures.

The 5 5/8% senior notes due 2025 picked up ¾ point to close at 51½ bid. The 6 1/8% senior paper due 2022 added ¾ point to close at 77½ bid.

Whiting Petroleum, another Denver-based E&P, saw its notes diverge.

The 6¼% senior notes due 2023 shot up ½ point to close at 18½ bid. The 6 5/8% senior notes due 2026 shed ¼ point to close at 18½ bid.

Hertz lower

Elsewhere, vehicle name Hertz’s issues drifted to lower levels, market sources said.

The 6¼% senior notes due 2022 dipped 2¼ points to close at 34¾ bid. The 5½% senior notes due 2024 lost 1¼ points to close at 36 bid.

Late Tuesday, the Estero, Fla.-based car rental company received court approval to use sidecar cash collateral to repay in full its pre-bankruptcy sidecar credit facility, Prospect News reported.

As of the date of its bankruptcy filing, the company said about $93 million was outstanding under the sidecar facility.

At the end of the Monday session, the company showed a loss per share $3.51 and $832 million of revenue for the second quarter.

After terminating a $500 million common stock offering, Hertz is now seeking debtor-in-possession financing.

“It will be interesting to see what kind of DIP they get, considering the stock situation,” a trader said.

Bombardier weaker

Manufacturer Bombardier’s paper finished the afternoon weakened, traders said.

The 7½% senior notes due 2025 fell 2 points to close at 75½ bid. The 6% senior paper due 2022 shed ¼ point to close at 85¾ bid.

During the Wednesday session, reports indicated that the Montreal-based air and rail manufacturer and Japanese counterpart Hitachi were awarded a $940 million contract to supply cars for a high-speed rail line in Spain.

The contract, which the company will receive 40%, is for 184 carriages in 23 sets of trains.

Deliveries are expected in September 2022 and March 2023.

On Monday, the Bombardier’s structure was under pressure after the buyer of its rail unit said that it would consider weak Q2 results in its negotiations.

Washington Prime improves

Mall owner Washington Prime’s notes were spotted improving, market sources said.

The 6.45% senior notes due 2024 added 4½ points to close at 43 bid.

The Columbus, Ohio-based real estate investment trust’s structure has seen increased attention this week after reporting its second-quarter earnings results.

Earnings were reported at a 1 cent per share profit and revenues of $98.76 million.

For July, the company reported being able to collect 71.3% of rents.

The company also reported receiving lender consents to modify its existing $1.3 billion credit facilities, including an immediate waiver of some financial covenants.

Chattanooga, Tenn.-based property name CBL’s issues ended with mixed results.

The 5¼% senior notes due 2023 tacked on 1¾ points to close at 24 bid. The 4.6% senior notes due 2024 gave back ¼ point to close at 22¼ bid.

Exela up

Software developer Exela’s paper picked up steam, traders said.

The 10% notes due 2023 racked up ¼ point to close at 29½ bid.

Also on Monday, the Irving, Tex.-based business software solutions provider issued its second-quarter earnings report.

The company showed a 34 cents per share loss.

In July, the company completed the sale of its records storage segment for $12.3 million.

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