Hertz eyed after bankruptcy news; United Airlines notes higher on positive sentiment

By James McCandless

San Antonio, May 26 – The Tuesday session in the distressed debt space was marked by positive sentiment.

Hertz Global Holdings, Inc.’s notes varied in direction after the company filed for bankruptcy late last week.

Meanwhile, United Airlines Holdings, Inc.’s issues were carried higher on positive market sentiment toward the prospects of economic recovery.

In the utilities space, PG&E Corp.’s paper rose after wildfire victims voted to approve its reorganization plan.

Elsewhere, in oil and gas, Superior Energy Services, Inc.’s notes diverged in the wake of the company’s scrapped merger.

Oil futures saw a boost as the afternoon ended, followed by Occidental Petroleum Corp.’s, Whiting Petroleum Corp.’s and Oceaneering International, Inc.’s issues.

Telecom name Intelsat SA’s paper was pushed higher in the run-up to announcing its participation in a C-band clearing plan.

Sector peer Frontier Communications Corp.’s notes tracked better

Hertz active

Hertz’s notes varied in direction by the end of the Tuesday session, traders said.

The 6¼% senior notes due 2022 lost 2½ points to close at 15¾ bid. The 5½% senior notes due 2024 gained 2 points to close at 15½ bid.

Late Friday, the Estero, Fla.-based car rental company announced that it had filed for Chapter 11 bankruptcy, Prospect News reported.

The company’s European, Australian, New Zealand and franchised locations are excluded from the filing.

At the time of the filing, Hertz said that it had $1 billion in cash on hand.

“It became impossible to shift cars,” a trader said. “Nobody can travel and the used car market is getting the squeeze.”

The company placed the blame on the coronavirus pandemic, which led to governments imposing restrictions on travel that hampered related industries.

Prior to the filing, the company had been in a forbearance period, holding talks with creditors and banks about how to handle about $400 million in lease payments.

United Airlines up

Meanwhile, United Airlines’ issues were carried higher, market sources said.

The 4¼% senior notes due 2022 improved by 4½ points to close at 81½ bid. The 5% senior notes due 2024 jumped up 5¼ points to close at 76 bid.

The Chicago-based air transportation name’s structure saw a sixth straight day of positivity as the market expresses its optimism on the economy as coronavirus restrictions continue to be lifted.

Data released Tuesday from the Transportation Security Administration showed that the daily average of air travelers for the week of May 23 was 262,734, representing the fifth week in a row of increases.

“I think it’s something to be cautious about,” a trader said. “We’re slowly building back up, but I think the positivity may be a little premature. We probably need another month to get a better picture of where we stand.”

PG&E rises

In the utilities space, PG&E’s paper was on the rise, traders said.

The 6.05% notes due 2034 rose ¼ point to close at 113½ bid.

After the close on Friday, the San Francisco-based bankrupt electric utility reported “overwhelming” acceptance of its reorganization plan after a count of preliminary voting results from wildfire victims.

The company said that the results mean that it continues to be on track to exit Chapter 11 bankruptcy by June 30.

Subsequently, a group of PG&E wildfire claimants filed a motion in bankruptcy court pushing for the judge to appoint an examiner to investigate alleged “voting procedural irregularities.”

A hearing on the matter is scheduled for June 4.

Superior Energy diverges

Elsewhere, in the oil and gas space, Superior Energy’s notes diverged, market sources said.

The 7 1/8% senior notes due 2021 tacked on ½ point to close at 31 bid. The 7¾% senior notes due 2024 held level at 29 bid.

Late last week, the Houston-based oilfield services provider announced that it would terminate its proposed merger with Forbes Energy Services, citing the upheaval of the energy markets due to the pandemic.

The company said that the original terms of the merger agreement were now rendered impractical due to current market conditions.

Concurrently, the company reported a first-quarter loss of 78 cents per share, narrower than the 99 cents per share loss expected by analysts.

Revenues were also better than expected at $321.5 million.

Oil boosted

Oil futures received a boost along with some distressed energy names, traders said.

West Texas Intermediate crude oil futures for July delivery garnered $1.10 to settle the session at $34.35 per barrel.

North Sea Brent crude oil futures for July delivery finished at $36.17 per barrel after a $1.04 lift.

Houston-based independent oil and gas producer Occidental Petroleum’s issues moved with futures.

The 2.9% senior notes due 2024 improved by 2¾ points to close at 80 bid. The 2.7% senior notes due 2022 moved up by ¾ point to close at 90½ bid.

Denver-based producer Whiting Petroleum’s paper followed the trend.

The 6¼% senior notes due 2023 pushed up 1¾ points to close at 12¾ bid. The 6 5/8% senior paper due 2026 grabbed ½ point to close at 11½ bid.

Houston-based oil and gas engineering name Oceaneering’s notes also gained ground.

The 4.65% senior notes due 2024 added 6 points to close at 78½ bid.

Intelsat, Frontier higher

Telecom company Intelsat’s issues pushed higher, market sources said.

Intelsat Jackson Holdings SA’s 5½% senior notes due 2023 rose 1½ points to close at 54½ bid. The 9½% senior notes due 2023 gained ¾ point to close at 25¾ bid.

The Luxembourg-based satellite operator’s structure was active in the run-up to the company’s late Tuesday announcement that it opted into the Federal Communications Commission’s accelerated C-band clearing plan.

The move commits the company to vacate the requisite airwaves in an auction.

Earlier this month, the company filed for Chapter 11 bankruptcy in order to secure funding that would ensure its ability to participate in the FCC’s C-band auction in December.

Norwalk, Conn.-based wireline communicator Frontier’s paper also tracked higher.

The 10½% senior notes due 2022 were lifted 1½ points to close at 34½ bid. The 11% senior paper due 2025 improved by 3 points to close at 35 bid.

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