Bombardier notes decline as ratings downgraded; CBL securities eyed in REIT space

By James McCandless

San Antonio, March 31 – The distressed debt market continued to focus on energy and newsmakers amid continuing economic pressure from the Covid-19 pandemic.

Bombardier Inc.’s notes dropped after the company received a ratings downgrade as it’s faced with production cuts.

Meanwhile, CBL & Associates Properties, Inc.’s issues varied as the company received its own ratings cut.

Sector peer Washington Prime Group Inc.’s paper popped up.

Department store name J.C. Penney Co., Inc.’s notes diverged after announcing that the company would furlough its workforce and extend store closures.

Retailer L Brands, Inc.’s issues saw mixed results.

Crude futures differed in direction, matched by the movements of Whiting Petroleum Corp.’s paper while Occidental Petroleum Corp.’s notes gained and California Resources Corp.’s issues trailed.

Elsewhere, gaming company Scientific Games Corp.’s notes varied a day after having its ratings knocked down.

Bombardier drops

Bombardier’s notes dropped throughout the session, traders said.

The 7 7/8% senior notes due 2027 fell 1¾ points to close at 68¾ bid. The 7½% senior notes due 2024 declined by 4½ points to close at 67½ bid.

About $21 million of the tranches combined changed hands.

After the close on Monday, Fitch Ratings issued downgrades for the Montreal-based aerospace manufacturer.

The agency cut the company’s long-term issuer default rating and senior unsecured debt ratings while removing all of its ratings from positive watch.

Fitch said that the action was taken in response to the company’s temporary production stoppages due to the effect of the coronavirus on the economy, which it expects to lead to a short-term reduction in revenue.

The agency also says that it casts doubt on impending divestitures.

Last week, the company halted aircraft and rail production across its Canadian operations and furloughed more than 12,000 employees.

CBL varies, WPG up

Meanwhile, property name CBL’s issues varied in direction, market sources said.

The 5¼% senior notes due 2023 held level to close at 25 bid. The 4.6% senior notes due 2024 picked up ¾ point to close at 20¾ bid.

The Chattanooga, Tenn.-based mall-focused real estate investment trust was another name to receive a ratings downgrade on Tuesday morning.

Fitch lowered the long-term issuer default ratings of the company and its operating partnership, CBL & Associates, LP, to CC from CCC+.

The agency expects that a distressed exchange or some form of restructuring will take place within the next 12 months.

Last week, the company announced that it would be temporarily closing properties and drawing $280 million under a credit facility due to the pandemic.

“There’s a possibility that under current conditions a distressed exchange could be faster than that,” a trader said. “But that depends on many things, like how they handle cash flow over the next few months.”

Columbus, Ohio-based sector peer Washington Prime’s paper popped up.

The 6.45% senior notes due 2024 jumped up 4¼ points to close at 58¾ bid.

J.C. Penney mixed

Retail name J.C. Penney’s notes were seen diverging, traders said.

The 5 7/8% senior notes due 2023 declined by 6 points to close at 36 bid. The 8 5/8% notes due 2025 were lifted ¾ point to close at 15½ bid.

The Plano, Tex.-based department store chain announced that it would extend its store closures indefinitely and furlough about 90,000 full-time and part-time employees.

Meanwhile, the company said it is using funds available under its revolving credit facility and taking other actions to improve its cash position and financial flexibility during the Covid-19 pandemic, Prospect News reported.

Previously the name said that it would close its retail and corporate locations until April 2.

“So many retailers were already on the bubble when this happened,” a trader said.

Columbus, Ohio-based retailer L Brands’ issues saw mixed results.

The 6¾% senior notes due 2036 shaved off ¼ point to close at 75 bid. The 5¼% senior notes due 2028 garnered 2 points to close at 77 bid.

Crude futures eyed

Crude oil futures differed in direction, exemplified in distressed energy tranches, market sources said.

West Texas Intermediate crude oil futures for May delivery added 39 cents to finish at $20.48 per barrel.

North Sea Brent crude oil futures for May delivery settled at $22.74 per barrel after being docked 2 cents.

Denver-based independent oil and gas producer Whiting Petroleum’s paper also moved in different directions.

The 6¼% senior paper due 2023 slid 4 points to close at 7 bid. The 6 5/8% senior notes due 2026 rose ¼ point to close at 7 bid.

Houston-based producer Occidental Petroleum’s notes gained ground.

The 2.9% senior notes due 2024 improved by ½ point to close at 55½ bid. The 6.45% senior notes due 2036 tacked on 3½ points to close at 48½ bid.

Los Angeles-based peer California Resources’ issues trailed.

The 6% senior notes due 2024 dipped 1¼ points to close at 1¾ bid. The 8% senior secured notes due 2022 shed 3½ points to close at 1½ bid.

Scientific Games differs

Elsewhere, gaming company Scientific Games’ paper also saw varied movements, traders said.

The 5% senior secured notes due 2025 inched up ¼ point to close at 87¾ bid. The 7% senior notes due 2028 dipped ½ point to close at 62½ bid.

The Las Vegas-based gaming and lottery name saw heightened attention after Moody’s Investors Service lowered the company’s corporate family rating, probability of default rating, speculative grade liquidity rating and senior unsecured notes rating.

The agency also affirmed a negative outlook, arguing that the company is set to lose revenue from a loss of customers visiting casinos and participating in lotteries as those entities close in response to government efforts to curtail the coronavirus outbreak.

© 2015 Prospect News.
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