Hertz notes in focus as ratings downgraded; Bombardier paper active on earnings miss

By James McCandless

San Antonio, May 7 – The distressed debt space spent the Thursday session with attention given to earnings results and ratings changes.

Hertz Global Holdings, Inc.’s notes varied in direction after receiving a ratings downgrade in the wake of its forbearance news.

Meanwhile, aerospace name Bombardier Inc.’s issues diverged after reporting a loss for the first quarter.

Pharmaceutical name Endo International plc’s paper rose after showing positive results in its first-quarter report.

Sector peer Mallinckrodt plc’s notes were under pressure.

In the retail space, L Brands, Inc.’s issues saw mixed results after receiving a slate of ratings downgrades.

Drug store chain Rite Aid Corp.’s paper was lifted.

In oil and gas, a slide in crude futures was matched by Whiting Petroleum Corp.’s notes while Occidental Petroleum Corp.’s and California Resources Corp.’s issues differed.

Hertz notes active

Hertz’s notes varied in direction by the end of the day’s activity, traders said.

The 6¼% senior notes due 2022 picked up 4 points to close at 22¼ bid. The 5½% senior notes due 2024 shaved off ½ point to close at 14¾ bid.

During the Thursday session, S&P Global Ratings issued a ratings downgrade for the Estero, Fla.-based car rental operator.

The agency lowered the company’s overall rating to SD from CCC- while affirming all of its issue ratings.

S&P cited the company’s Tuesday move to obtain a forbearance agreement with creditors after foregoing lease payments asset-backed security vehicle transactions.

Hertz struck the deal to extend the forbearance to May 22 in a bid to stave off bankruptcy and work out a plan on how to operate efficiently during the Covid-19 pandemic.

The company has hired two financial advisers to assist with the plan.

Bombardier diverges

Meanwhile, aerospace name Bombardier’s issues diverged, market sources said.

The 6% senior notes due 2022 gained 1¾ points to close at 69 bid. The 7½% senior notes due 2025 declined by 2½ points to close at 58½ bid.

Early Thursday morning, the Montreal-based aerospace manufacturer released its earnings results for the first quarter.

The company reported a loss of $169 million, or a 10 cents per share loss, versus the 7 cents per share loss that analysts expected.

Revenues came in at $3.69 billion.

In the last few weeks, the company has sought to bring temporarily idled production facilities back online in Canada and Europe.

Endo improves

Pharmaceutical name Endo’s paper was on the rise, traders said.

The 6% senior notes due 2025 rose ½ point to close at 73 bid. The 6% senior paper due 2023 added 1¼ points to close at 77½ bid.

The Dublin-based generic drug producer was another name to release its first-quarter earnings results on Thursday morning.

The company showed a 95 cents per share profit, well above the 54 cents per share profit projected by analysts.

Revenues surpassed expectations at $820.41 million.

“Apparently they make some drugs that have seen higher usage related to coronavirus,” a trader said. “These results are largely tied to the pandemic.”

Staines-upon-Thames, England-based sector peer Mallinckrodt’s notes were under pressure.

The 5¾% senior notes due 2022 dipped ¾ point to close at 35 bid. The 4¾% senior notes due 2023 fell 1¼ points to close at 26½ bid.

L Brands mixed

In the retail space, L Brands’ issues saw mixed results, market sources said.

The 6¾% senior notes due 2036 chalked off 2 points to close at 69½ bid. The 5¼% senior notes due 2028 held level at 70 bid.

Moody’s Investors Service issued a slate of downgrades for the Columbus, Ohio-based department store name.

The company saw a reduction in its corporate family rating, probability of default rating and issue-level ratings.

On the other side of the spectrum, the speculative grade liquidity rating was upgraded.

The agency said that the downgrades reflect the news that the company had reached an agreement to terminate the sale of its Victoria’s Secret segment.

Moody’s argues that the name’s cash burn will increase as it attempts to execute a turnaround on the unit during the already tumultuous pandemic.

The outlook is negative.

On Monday, L Brands and prospective buyer Sycamore Partners mutually agreed to nix the $525 million deal struck in February.

Camp Hill, Pa.-based drug store chain Rite Aid’s paper was lifted.

The 6 1/8% senior notes due 2023 garnered ½ point to close at 91¼ bid.

Oil lower

In oil and gas, oil futures saw a slide as distressed energy followed, traders said.

West Texas Intermediate crude oil futures for June delivery fell 44 cents to finish at $23.55 per barrel.

North Sea Brent crude oil futures for July delivery capped the day at $29.46 per barrel after a 26 cent dip.

Denver-based independent oil and gas producer Whiting Petroleum’s notes matched the movement of futures.

The 6¼% senior notes due 2023 gave up 2 points to close at 7 bid. The 6 5/8% senior notes due 2026 shaved off ½ point to close at 7 bid.

Houston-based producer Occidental Petroleum’s issues differed in direction.

The 2.9% senior notes due 2024 fell ½ point to close at 77 bid. The 2.7% senior notes due 2022 closed level at 88¼ bid.

Los Angeles-based peer California Resources’ paper also varied.

The 6% senior notes due 2024 trailed by ¼ point to close at 3¼ bid. The 8% senior secured paper due 2022 picked up ¼ point to close at 4¼ bid.

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