Hertz notes decline as bankruptcy loan sought; American Airlines eyed in travel space

By James McCandless

San Antonio, Aug. 28 – As the week in distressed debt trading came to an end, names in the travel sector were in focus again.

Hertz Global Holdings, Inc.’s notes declined amid news that the company is seeking a bankruptcy loan of up to $1.5 billion.

Meanwhile, air carrier American Airlines Group Inc.’s issues varied in direction after warning of thousands of employee layoffs if federal aid legislation does not pass.

Sector peer United Airlines Holdings, Inc.’s paper was lifted.

As oil futures settled the day in different directions, Occidental Petroleum Corp.’s notes diverged while Whiting Petroleum Corp.’s and Antero Resources Corp.’s issues shot up.

Air and rail builder Bombardier Inc.’s paper ended on mixed ground after announcing impending layoffs.

Elsewhere, REIT Washington Prime Group Inc.’s notes were positive in the wake of a ratings downgrade.

Property owner CBL & Associates Properties, Inc.’s issues dropped.

Hertz declines

Hertz’s notes declined on Friday to wrap up the week, traders said.

The 6¼% senior notes due 2022 dropped by 1½ points to close at 38¾ bid. The 5½% senior notes due 2024 lost 2½ points to close at 40½ bid.

After the close on Thursday, news broke that the Estero, Fla.-based car rental company is looking for a bankruptcy loan to fund the process.

Hertz is in conversations with existing creditors and outside investors for a loan of $1.1 billion to $1.5 billion.

The move comes after Hertz attempted to sell $500 million in common stock for bankruptcy funds while warning potential investors that the securities would eventually be worthless.

After the Securities and Exchange Commission started an inquiry, the company cancelled the offering.

In May, Hertz filed for Chapter 11 bankruptcy after the coronavirus pandemic essentially shut down travel worldwide.

Airlines active

Meanwhile, American Airlines’ issues varied in direction, market sources said.

The 11¾% senior notes due 2025 shaved off ½ point to close at 96½ bid. The 5% senior notes due 2022 gained 2 points to close at 65½ bid.

This week, the Fort Worth-based airline announced that its workforce will potentially be reduced by 40,000 if a second round of payroll aid is not passed by the federal government.

In all, 19,000 of those jobs would be involuntary cuts if legislation were not signed by October.

The requisite funds have been proposed in the U.S. Senate, but negotiations have stalled.

The first round of funding, totaling $25 billion, was distributed to the industry in March.

As the coronavirus continues to see high case numbers, demand for air travel remains low.

Chicago-based sector peer United Airlines’ paper was lifted.

The 5% senior notes due 2024 rose 1½ points to close at 89½ bid. The 4¼% senior paper due 2022 pushed up 2 points to close at 93 bid.

Oil diverges

Meanwhile, distressed energy names trended higher, traders said.

West Texas Intermediate crude oil futures for October delivery shed 7 cents to cap the week at $42.97 per barrel.

North Sea Brent Crude oil futures for November delivery finished at $45.81 per barrel after a 21 cent upward push.

Houston-based independent oil and gas producer Occidental Petroleum’s notes diverged.

The 2.9% senior notes due 2024 tacked on 1 point to close at 93 bid. The 2.7% senior notes due 2022 were docked ¼ point to close at 98 bid.

Denver-based producer Whiting Petroleum’s issues shot up.

The 6¼% senior notes due 2023 gained 1 point to close at 24 bid. The 6 5/8% senior notes due 2026 garnered 1 point to close at 24 bid.

Antero Resources, another Denver-based E&P, saw positivity for its paper.

The 5 1/8% senior notes due 2022 picked up ½ point to close at 85½ bid. The 5% senior notes due 2025 rose ¾ point to close at 70¼ bid.

Bombardier mixed

Bombardier’s notes ended on mixed ground, market sources said.

The 7 7/8% senior notes due 2027 chalked off ½ point to close at 73 bid. The 7½% senior notes due 2025 closed level at 75 bid.

The Montreal-based airplane and railcar manufacturer announced this week that more than 200 employees would be laid off from a Canadian facility over the next several months.

The company recently warned of layoffs at a plant in the United Kingdom.

Also this week, Fitch Ratings cut the company’s senior notes to CCC/RR4 from CCC+/RR3 and removed the notes from ratings watch negative.

Washington Prime eyed

Elsewhere, retail properties name Washington Prime’s issues were positive, traders said.

The 6.45% senior notes due 2024 reached up ½ point to close at 53½ bid.

On Thursday, the Columbus, Ohio-based real estate investment trust received a ratings downgrade from Fitch Ratings.

The agency slashed the ratings for the company and its operating partnership, Washington Prime Group, LP, including the long-term issuer default ratings to CC from CCC+ and issue-level ratings.

Fitch expects an exchange or restructuring within the next 12 months amid deteriorating operating performance.

The 5¼% senior paper due 2023 dipped ¾ point to close at 39½ bid. The 4.6% senior notes due 2024 gave back ½ point to close at 40 bid.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.