American Airlines notes down after layoff warning; Antero trades up in energy space

By James McCandless

San Antonio, Aug. 25 – Travel and energy sector names were the focus of trading in Tuesday’s distressed debt market.

American Airlines Group Inc.’s notes were pushed down after warning of tens of thousands of layoffs and furloughs if federal aid ends.

Sector peer United Airlines Holdings, Inc.’s issues varied in direction.

In the oil and gas space, Antero Resources Corp.’s paper rose after it announced early results for a two-series tender offer.

As oil futures marked the session with gains, Occidental Petroleum Corp.’s and Whiting Petroleum Corp.’s notes diverged while Transocean Inc.’s issues were under water.

Meanwhile, retailer L Brands, Inc.’s paper moved on separate tracks as its common stock received an analyst upgrade.

Cosmetics producer Revlon, Inc.’s notes saw mixed results.

Mall owner Washington Prime Group Inc.’s issues moved upward.

Airlines eyed

American Airlines notes were pushed down throughout Tuesday, traders said.

The 11¾% senior notes due 2025 dropped ½ point to close at 94¾ bid. The 5% senior notes due 2022 shaved off ½ point to close at 62 bid.

Early Tuesday morning, the Fort Worth-based air traveler announced that if a second round of federal aid isn’t passed by October, up to 40,000 workers could be laid off or furloughed.

The company said that 19,000 of those positions would be involuntary cuts.

In March, the federal government enacted legislation to provide the sector with $25 billion in payroll aid that is set to expire in October.

A new round of aid has been proposed in the U.S. Senate with support from president Donald Trump, though negotiations have been hampered.

“I would think that something will be passed a little closer to the deadline,” a trader said.

On Monday, American Airlines announced that it was suspending flights to 15 U.S. airports as demand remains low due to the coronavirus pandemic.

Chicago-based sector peer United Airlines’ issues varied in direction.

The 5% senior notes due 2024 garnered 1¼ points to close at 89 bid. The 4¼% senior notes due 2022 shaved off ¼ point to close at 92½ bid.

Antero rises

In the oil and gas space, Antero Resources’ paper rose, market sources said.

The 5 1/8% senior paper due 2022 picked up 1½ points to close at 85 bid. The 5% senior paper due 2025 tacked on 1½ points to close at 70 bid.

As Tuesday trading began, Antero announced that as of 5 p.m. ET on Aug. 24, $88,389,000 of its 2022 notes and $95,661,000 of its 5 5/8% senior notes due 2023 had been tendered and not withdrawn prior to the Dutch auction early tender deadline.

The company said it intends to accept for purchase all tendered notes and to make payment on Aug. 25.

Last week, Antero priced $250 million of 4.25% convertible notes due 2026 with an initial conversion premium of 20%.

With the proceeds from the notes, Antero plans to repay debt under its credit facility.

Oil names diverge

As oil futures marked the session with more gains, distressed energy tranches were pushed in different directions, traders said.

West Texas Intermediate crude oil futures for October delivery shifted up 73 cents to close at $43.35 per barrel.

North Sea Brent crude oil futures for October delivery ended at $45.86 per barrel after a 73 cent pickup.

Houston-based producer Occidental Petroleum’s notes diverged.

The 2.9% senior notes due 2024 added ¼ point to close at 91¾ bid. The 2.7% senior notes due 2022 dipped ¾ point to close at 97½ bid.

Denver-based E&P Whiting Petroleum’s issues also saw differing movements.

The 6¼% senior notes due 2023 garnered ¾ point to close at 22¼ bid. The 6 5/8% senior notes due 2026 held level to close at 21½ bid.

Steinhausen, Switzerland-based contract driller Transocean’s paper was under water.

The 6½% senior notes due 2020 dived 6 points to close at 84 bid.

L Brands, Revlon mixed

Meanwhile, retailer L Brands’ notes moved on separate tracks, market sources said.

The 6¾% senior notes due 2036 improved by ½ point to close at 102 bid. The 5¼% senior notes due 2028 slipped ¼ point to close at 96¼ bid.

The Columbus, Ohio-based department store company’s structures saw attention after an analyst with MKM Partners upgraded its common stock to “buy” from “neutral.”

In a note, the analyst said that with better performance metrics and cost-cutting measures, the name’s Victoria’s Secret unit should result in better earnings in the last half of 2020.

Meanwhile, its more profitable arm, Bath & Body Works, was hailed as one of the least volatile retail concepts.

New York-based cosmetics producer Revlon’s issues saw mixed results.

The 5¾% senior notes due 2021 racked up 2½ points to close at 22½ bid. The 6¼% senior notes due 2024 fell 4¼ points to close at 13¼ bid.

Washington Prime up

Mall owner Washington Prime’s paper moved upward, traders said.

The 6.45% senior notes due 2024 rose 1¾ points to close at 52 bid.

In the last few trading days, the Columbus, Ohio-based real estate investment trust’s paper has taken a positive route despite receiving a ratings cut on Monday.

S&P Global Ratings lowered the company’s issuer credit rating, issue-level ratings and preferred stock rating.

The agency said the cuts were enacted to reflect the view that recovery prospects are lower following credit facilities amendments.

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