Uniti notes gain after settlement takes effect; Antero paper eyed in energy space

By James McCandless

San Antonio, Sept. 23 – At the week’s midpoint, newsmakers in the communications and energy sectors took up much of the attention in the distressed market.

Uniti Group Inc.’s notes gained ground after large customer Windstream Holdings Inc. exited bankruptcy and the settlement between the two parties took effect.

Sector peer CBL & Associates Properties, Inc.’s issues varied in direction.

Meanwhile, in oil and gas, Antero Resources Corp.’s paper diverged after receiving a ratings upgrade.

Despite oil futures ending the day with modest gains, SM Energy Co.’s, Transocean Ltd.’s and Occidental Petroleum Corp.’s notes fell.

Manufacturer Bombardier, Inc.’s issues declined a day after doubts were cast on the closing process for the sale of its aerostructures business.

In the travel space, American Airlines Group, Inc.’s and United Airlines Holdings, Inc.’s paper moved on different paths.

Uniti notes gain

Uniti’s notes gained ground by the end of the Wednesday session, traders said.

The 8¼% senior secured notes due 2023 improved by ½ point to close at 99 bid. The 7 7/8% senior secured notes due 2025 garnered ¼ point to close at 105½ bid.

Late Monday, news broke that Windstream, a large customer of the Little Rock, Ark.-based communications-focused real estate investment trust, had exited bankruptcy.

As part of the exit, the settlement between the two parties that was reached earlier in the year officially took effect.

As part of the agreement that was struck in March, the company agreed to invest up to $1.75 billion in growth capital improvements, consisting of long-term fiber and related assets in some Windstream ILEC and CLEC properties over the initial term of new leases.

A year after the first investment, the annual base rent payable by Windstream will increase by an amount equal to 8% of the new investment, subject to a 0.5% annual escalator.

Chattanooga, Tenn.-based property owner CBL’s issues varied in direction.

The 5¼% senior notes due 2023 grabbed ¼ point to close at 37¾ bid. The 4.6% senior notes due 2024 shaved off ¾ point to close at 38¼ bid.

Antero diverges

Meanwhile, in oil and gas, Antero Resources’ paper diverged, market sources said.

The 5 1/8% senior notes due 2022 gained ¾ point to close at 83¼ bid. The 5 5/8% senior paper due 2023 closed level at 74½ bid.

Nearing the close on Tuesday, the Denver-based independent oil and gas producer received a ratings upgrade from S&P Global Ratings.

The agency raised the company’s corporate family rating, probability of default rating, speculative grade liquidity rating and issue-level ratings.

The outlook was changed to stable from negative.

S&P said that the shifts were in reaction to the name’s reduced refinancing risk, modest debt reduction and improved cost structure.

“It’s interesting to see because so many E&P’s are loaded up with debt and being forced to refinance,” a trader said.

Oil tranches fall

Despite oil futures ending the day with modest gains, distressed energy tranches fell, traders said.

West Texas Intermediate crude oil futures for November delivery added 13 cents to finish at $39.93 per barrel.

North Sea Brent crude oil futures for November delivery ended the session at $41.77 per barrel after a 5 cent pickup.

SM Energy, another Denver-based producer, saw its notes fall.

The 5% senior notes due 2024 gave back 2¼ points to close at 52¼ bid. The 6 5/8% senior notes due 2027 dipped 1½ points to close at 45¼ bid.

Steinhausen, Switzerland-based contract driller Transocean’s issues followed the negative track.

The 7½% senior notes due 2026 were docked ¼ point to close at 22¼ bid. The 6½% senior notes due 2020 lost 3¾ points to close at 90¾ bid.

Houston-based E&P Occidental Petroleum’s paper joined the trend.

The 2.9% senior notes due 2024 chalked off 1½ points to close at 83 bid. The 2.7% senior paper due 2022 was pushed down 2¼ points to close at 90¾ bid.

Bombardier declines

Manufacturer Bombardier’s notes were in decline, a trader said.

The 7 7/8% senior notes due 2027 lost ¼ point to close at 74 bid.

The Montreal-based aircraft and railcar builder’s structure continued to see attention following Tuesday’s news that the prospective buyer of its aerostructures unit cast doubt on whether the sale could be closed.

In a Securities and Exchange Commission filing, Spirit AeroSystems Holdings Inc. said that the $500 million deal will automatically terminate if closing conditions are not met by Oct. 31.

Those conditions include an absence of legal barriers, receipt of third-party consents and no major adverse changes to the business, including fuselage and wing factories.

An analyst said that while Bombardier has enough time to meet the conditions, Spirit’s announcement lowers the probability of a successful close.

Airlines trade mixed

In the travel space, American Airlines’ issues moved on different paths, market sources said.

The 5% senior notes due 2022 dipped 1 point to close at 68 bid. The 11¾% senior notes due 2025 garnered ¼ point to close at 97¼ bid.

In the last few weeks, the paper of the Fort Worth-based airline and others in the sector has remained in focus as the push for more federal payroll aid continues.

Last week, executives and union officials lobbied the government to pass a second round of aid before it expires on Oct. 1.

The first round of $25 billion was passed in March.

Chicago-based carrier United Airlines’ paper also yielded mixed results.

The 5% senior notes due 2024 closed level at 88 bid. The 4¼% senior notes due 2022 reached up 1 point to close at 94¼ bid.

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