Hertz spikes on rights offering; Frontier mixed in telecom space

By James McCandless

San Antonio, June 13 – The distressed debt space spent Thursday focused on the newsmakers of the week.

Hertz Global Holdings Inc.’s notes spiked after the company announced a rights offering to raise $750 million.

Elsewhere, in telecom, Frontier Communications Corp.’s issues were mixed a day after receiving an analyst downgrade for some of its bonds.

Sector peer Intelsat SA’s paper moved upward.

In retail, Neiman Marcus Group, Inc.’s notes were dropping a few days after posting its third-quarter earnings.

PetSmart, Inc., another retailer, saw its issues end with mixed results.

Meanwhile, in energy, Ensco Rowan plc’s paper dipped as the company responds to an investor call for a special dividend.

As oil futures gained, California Resources Corp.’s notes declined and Weatherford International plc’s issues finished mixed.

Drugmaker Teva Pharmaceutical Industries Ltd.’s paper rose.

Hertz higher

Rental name Hertz’s notes spiked on Thursday, traders said.

The 5½% notes due 2024 jumped up 5 points to close at 91½ bid.

On Thursday, the Estero, Fla.-based vehicle rental company announced that it had approved a rights offering with the aim of raising $750 million.

The offering entails that on June 24 each shareholder receives one transferable subscription right for each share of common stock owned.

Each right entitles the holder to buy 0.688285 shares at the subscription price of $12.95 per whole share.

“They’ve been on a rollercoaster this past year,” a trader said. “It’s a name that never really meets expectations.”

Frontier mixed, Intelsat up

Elsewhere, in the telecom space, Frontier’s issues were mixed, market sources said.

The 10½% notes due 2022 fell ¼ point to close at 67¼ bid. The 11% notes due 2025 tacked on ¾ point to close at 62¼ bid.

The Norwalk, Conn.-based wireline communications name has seen more pressure this week after a JPMorgan analyst issued a downgrade on some of its bonds.

The analyst wrote that the company must act soon to net a positive cash flow or rework its agreements with creditors concerning 2022 maturities.

Luxembourg-based satellite operator Intelsat’s paper was on an upward trend.

Intelsat Jackson Holdings SA’s 5½% paper due 2023 edged up ¼ point to close at 90 bid. Intelsat (Luxembourg) SA’s 8 1/8% notes due 2023 added 3½ points to close at 79 bid.

Neiman drops, PetSmart mixed

Retailer Neiman Marcus’ notes saw a drop this week, traders said.

The 14% notes due 2024 lost 1½ points to close at 88 bid on the heels of a previous 1½ points drop on Wednesday.

On Tuesday, the Dallas-based luxury department store chain released its earnings report for the third quarter.

The name showed a net loss of $31.2 million, a wider loss than the one for this period last year.

Revenues were reported at $1.05 billion.

The company also announced that it had reached a final agreement with creditors to extend the maturities on its debt.

Phoenix-based pet supplies retailer PetSmart’s issues finished mixed.

The 8 7/8% notes due 2025 picked up 1 point to close at 99 bid. The 5 7/8% notes due 2025 slipped ¼ point to close at 96¼ bid.

The company’s e-commerce segment Chewy.com is expected to launch an initial public offering on Friday.

Ensco Rowan dips

Energy name Ensco Rowan’s paper saw a dip, market sources said.

The 5.2% paper due 2025 slipped ½ point to close at 69½ bid. The 7¾% paper due 2026 lost 5 points to close at 73 bid.

After the close on Thursday, the London-based contract driller responded to a large holder’s request for a $2.5 billion special dividend to common stock holders.

The company said that it received the proposal from Luminus Management, LLC and welcomed investor perspectives.

“Translation: it’s not going to happen,” a trader said.

Oil futures up

As oil futures improved, distressed energy tranches moved in varied directions, traders said.

Los Angeles-based independent oil and gas name California Resources’ notes declined.

The 6% notes due 2024 fell 1 point to close at 59 bid. The 8% notes due 2022 lost ¾ point to close at 69¼ bid.

Baar, Switzerland-based oilfield services provider Weatherford’s issues closed mixed.

The 8¼% notes due 2023, while moving up to 50 bid during the session, ended back down at 49½ bid. The 9 7/8% notes due 2024 added ¼ point to close at 51 bid.

West Texas Intermediate crude oil futures for July delivery rose $1.14 to end the day at $52.28 per barrel.

North Sea Brent crude oil futures for August delivery finished at $61.31 per barrel after a $1.30 gain.

Teva rises

In pharma, Teva’s paper saw a rise on Thursday, market sources said.

The 3.15% paper due 2026 picked up 1½ points to close at 79¾ bid. The 4.1% paper due 2046 traded up ¼ point to close at 67¼ bid.

Market analysts are weighing in on the Petach Tikva, Israel-based generic drugmaker’s legal exposure as it becomes embroiled in cases related to the opioid epidemic.

“In my mind, they’re going to have to pay a lot of money and they’re highly levered,” a trader said. “I think you might see a bankruptcy filing in a year or two.”

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