Transocean notes drop on strategic alternatives news; Bombardier up after Q2 results

By James McCandless

San Antonio, Aug. 6 – During the Thursday distressed debt session, the market focused on second-quarter earnings.

Transocean Ltd.’s notes dropped after the company announced that it would be conducting a strategic alternatives review.

While oil futures ended the day lower, Occidental Petroleum Corp.’s, Antero Resources Corp.’s and Whiting Petroleum Corp.’s issues varied in direction.

Manufacturing name Bombardier Inc.’s paper moved up despite reporting an earnings per share loss for the second quarter.

Meanwhile, auto parts maker Tenneco Inc.’s notes were lifted after releasing a lukewarm Q2 earnings report.

Sector peer Titan International, Inc.’s issues spiked after showing better-than-expected results for Q2.

Elsewhere, American Airlines Group Inc.’s paper diverged while United Airlines Holdings, Inc.’s notes backed off of recent gains.

Transocean drops

Transocean’s notes dropped during Thursday’s session, traders said.

The 7½% senior notes due 2031 shed 1½ points to close at 27½ bid. The 8% senior notes due 2027 sunk 5½ points to close at 43½ bid.

During the Thursday session, the Steinhausen, Switzerland-based contract driller announced that it would be conducting a strategic alternatives review to find solutions to address its $9 billion in debt.

The company hired Lazard Freres & Co. LLC to advise on the review and reached an exchange agreement for bonds maturing in 2023 for new notes due 2027.

Last week, the name reported that it broke even on earnings for the second quarter, better than the 27-cents loss analysts had predicted.

Revenues came in at $930 million.

“All of the pressures on the sector right now have kneecapped smaller companies,” a trader said. “Transocean seems to have some wiggle room for now.”

Oil names vary

While oil futures ended the day down, distressed energy names varied in direction, market sources said.

West Texas Intermediate crude oil futures for September delivery shed 24 cents to settle at $41.95 per barrel.

North Sea Brent crude oil futures for October delivery ended at $45.09 per barrel after an 8-cent dip.

Houston-based independent oil and gas producer Occidental Petroleum’s issues drifted apart.

The 2.9% senior notes due 2024 gave up 1 point to close at 94½ bid. The 2.7% senior notes due 2022 inched up ¼ point to close at 97¼ bid.

Denver-based producer Antero Resources’ paper moved along separate tracks.

The 5 1/8% senior paper due 2022 dipped ¾ point to close at 81¼ bid. The 5% senior paper due 2025 gained 4½ points to close at 69 bid.

Whiting Petroleum, another Denver-based E&P, saw its notes end with mixed results.

The 6¼% senior notes due 2023 rose ¾ point to close at 19¾ bid. The 6 5/8% senior notes due 2026 shaved off ¼ point to close at 18¼ bid.

Bombardier up

Manufacturing name Bombardier’s issues were moving up, traders said.

The 6% senior notes due 2022 garnered 1¾ points to close at 90¾ bid. The 7½% senior notes due 2025 tacked on 1½ points to close at 80½ bid.

About $20 million of the tranches combined was on the tape.

On Thursday morning, the Montreal-based air and rail manufacturer’s structure was positive despite reporting weak second-quarter earnings.

The company reported an earnings per share loss of 30 cents, wider than analyst predictions of an 11 cents per share loss.

Revenues outpaced expectations at $2.7 billion.

The name reported free cash flow of negative $1.04 billion.

Sales dropped by 37%, which Bombardier blamed on Covid-19-related pressures.

Earlier this week, the company’s sale of its rail unit to Alstom was approved by European Union antitrust regulators.

Tenneco lifted

Meanwhile, auto parts maker Tenneco’s paper was lifted, market sources said.

The 5 3/8% senior paper due 2024 jumped up 6½ points to close at 73½ bid.

At the Thursday market open, the Lake Forest, Ill.-based auto parts maker was another to release its earnings results for the second quarter.

The company showed an earnings per share loss of $2.15 per share, better than the $3.52 per share loss that analysts were expecting.

Revenues also beat expectations at $2.64 billion.

The name suffered a 40% drop in sales.

Titan spikes

Sector peer Titan International’s notes saw a spike, traders said.

The 6½% notes due 2023 rose 4 points to close at 68 bid.

The Quincy, Ill.-based sector peer was another company to add its Q2 earnings report to the pile on Thursday.

The name’s report saw a 17 cents per share earnings loss, better than what analysts predicted at a 36 cents per share loss.

Revenues were higher than predicted at $286.13 million.

AA differs, United off

Elsewhere, air carrier American Airlines’ issues diverged, market sources said.

The 5% senior notes due 2022 picked up 5 points to close at 63 bid. The 3¾% senior notes due 2025 dived 7 points to close at 51 bid.

The airline sector, including the Fort Worth-based air traveler’s structure, remained in focus on Thursday a day after a group of U.S. senators proposed a second round of federal aid.

A $25 billion aid package was proposed to help keep employees on the payroll, potentially supplementing a $32 billion package passed in March.

President Trump endorsed the proposal on Wednesday.

Chicago-based peer United Airlines’ paper backed off of recent gains.

The 5% senior paper due 2024 fell ¾ point to close at 85¼ bid. The 4¼% senior paper due 2022 chalked off ¼ point to close at 90¾ bid.

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