U.S. Steel notes eyed on lowered guidance; Bombardier trades up after contract news

By James McCandless

San Antonio, Dec. 18 – As the distressed debt space wrapped up the week, manufacturing names were in the forefront.

United States Steel Corp.’s notes varied after the company released fourth-quarter guidance that was lower than previously estimated.

Sector peer Cleveland-Cliffs Inc.’s issues declined.

Meanwhile, manufacturing company Bombardier, Inc.’s paper gained ground after its rail unit won a new contract.

Software developer Exela Technologies, Inc.’s notes were under pressure after securing a five-year term loan facility.

Despite another day of rising oil futures, Transocean Ltd.’s and Antero Resources Corp.’s issues diverged in direction while Occidental Petroleum Corp.’s paper fell.

In the retail space, Rite Aid Corp.’s paper moved in opposite directions after outpacing Q3 earnings expectations.

Pet supplies chain PetSmart, Inc.’s notes rose.

U.S. Steel mixed

U.S. Steel’s notes varied in direction on Friday, traders said.

The 6 7/8% senior notes due 2025 pushed up 1¼ points to close at 96½ bid. The 6¼% senior notes due 2026 declined by 1¼ points to close at 90¾ bid.

After the market close on Thursday, the Pittsburgh-based steel producer released its updated guidance for the fourth quarter.

The company now expects to report a loss of 85 cents a share, widening from the consensus estimate of a 54 cent per share loss.

Adjusted EBITDA is slated to come in in the $55 million range.

In a note, chief executive officer David Burritt said that so far, December’s performance has been particularly strong driven by the flow-through of higher steel prices, more nimble operations, and a continued focus on cost management.

Earlier in the month, U.S. Steel announced it purchased the remaining stake outstanding of Big River Steel for $774 million.

Cleveland-based sector peer Cleveland-Cliffs’ issues declined.

The 7% senior notes due 2027 sank 1 point to close at 96½ bid.

Bombardier gains

Meanwhile, manufacturer Bombardier’s paper gained ground, market sources said.

The 7½% senior notes due 2025 rose 1 point to close at 93 bid. The 6% senior paper due 2022 reached up ½ point to close at 98 bid.

Early Friday, news broke that the Montreal-based air and rail builder has won a new contract from Vancouver’s transit authority.

The company will be paid $567.45 million by TransLink to manufacture 205 new rail cars over the course of the next seven years.

The first car is expected to be in service in 2023.

Recently, Bombardier announced that it had received regulatory approvals to complete the sale of its rail unit to a peer.

For the segment, French counterpart Alstom has agreed to pay $8.4 billion in a deal initially staggered by financial concerns due to Covid-19.

The deal is expected to close in January.

Exela declines

Software provider Exela’s notes were under pressure through the session, traders said.

The 10% notes due 2023 declined by 1 point to close at 30½ bid.

Late Thursday, the Irving, Tex.-based business software developer announced that it entered into a five-year term loan facility with global alternative investment firm Angelo Gordon that provides initial funding of approximately $92 million, Prospect News reported.

Subject to some conditions, further funding of $53 million may become available.

A portion of the proceeds from the initial funding will be used to retire all $83 million of debt outstanding under the company’s accounts receivables securitization facility.

Under the new facility, the company projects its liquidity will be greater than $140 million assuming full funding.

Oil names in focus

Despite another day of rising oil futures, distressed energy names were pulled along different tracks, market sources said.

West Texas Intermediate crude oil futures for February delivery shot up 70 cents to cap the day at $49.24 per barrel.

North Sea Brent crude oil futures for February delivery ended at $52.26 per barrel after a 76 cent add-on.

Steinhausen, Switzerland-based contract driller Transocean’s issues diverged in direction.

The 7½% senior notes due 2031 held level to close at 35½ bid. The 8% senior notes due 2027 grabbed 1¼ points to close at 48 bid.

Denver-based independent oil and gas producer Antero Resources’ paper drifted apart.

The 5 1/8% senior notes due 2022 jumped up 3¼ points to close at 100 bid. The 5 5/8% senior notes due 2023 moved down 1 point to close at 97½ bid.

Houston-based producer Occidental Petroleum’s notes fell.

The 2.9% senior notes due 2024 shed ½ point to close at 96 bid. The 2.7% senior notes due 2022 slipped ¾ point to close at 100½ bid.

Rite Aid mixed

In the retail space, Rite Aid’s paper moved in opposite directions, traders said.

The 7.7% senior debentures due 2027 dropped 2¾ points to close at 95¼ bid. The 7½% senior secured notes due 2025 inched up ¼ point to close at 105¼ bid.

Early Thursday, the Camp Hill, Pa.-based drug store name issued its Q3 earnings report.

The company reported a profit of 40 cents per share and revenues of $6.12 billion, both exceeding expectations.

Also, the company raised its 2021 guidance, projecting revenues of between $23.9 billion and $24.2 billion.

Phoenix-based pet supplies retailer PetSmart’s paper rose.

The 8 7/8% senior notes due 2025 pushed up ½ point to close at 103¼ bid. The 5 7/8% senior paper due 2025 rose ¼ point to close at 102¾ bid.

© 2015 Prospect News.
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