AMC bonds dominate market; American Airlines better; Energy Transfer up; Valaris active

By Cristal Cody

Tupelo, Miss., Jan. 29 – AMC Entertainment Holdings, Inc.’s bonds continued a weeklong rally on Friday in heavy secondary trading.

The company’s 12% second-lien senior secured notes due 2026 (Ca/C) climbed more than 7½ points to 73 5/8 bid, a source said. The notes traded in the same session a week ago at 39½ bid and at the start of the year at 27 bid.

AMC’s 10½% first-lien senior secured notes due 2025 (Caa2/CCC) hit 102 bid, up 1 point on the day and 13 points higher from the same session last week.

The issue traded at the start of January at 73½ bid.

“The AMC complex alone was responsible for half of all CCC index gain this week, with the 10.5s +38% for the week, and 12s +182%,” according to a BofA Securities Inc. global research note on Friday. “The issuer enterprise value has now doubled from pre-pandemic levels, with the theaters still largely empty.”

AMC’s bonds have rallied since the company announced additional funding, including $917 million of new equity and debt capital on Monday and another $305 million through its at-the-market equity program on Tuesday.

Additionally, Silverlake Group LLC converted the $600 million of 2.95% first-lien secured convertible notes issued by AMC into equity, which settled on Friday, S&P Global Ratings said in a ratings upgrade notice.

The company’s stock has been volatile, catapulting 301.21% to $19.90 on Wednesday, dropping 56.63% to $8.63 on Thursday and climbing back up 53.65% to $13.26 on Friday.

“They’re sitting on top of a lot of equity value thanks to what’s been happening with the stock that has been shorted, and they did a high-yield offering, so that’s basically avoiding bankruptcy,” a market source said. “Still, it’s a risky investment. The bonds are yielding more than 10% – it’s still distressed.”

Laredo notes decline

Looking at the Covid-19-impacted airlines, American Airlines Group Inc.’s bonds were about 1 to 2 points better in heavy volume on Friday, a source said.

The company’s 3¾% senior notes due 2025 (Caa1/CCC/CCC) rose to 76 5/8 bid after adding 3¼ points on Thursday.

Market tone was weaker on the day with major stock indices down 1.93% to 2.03%.

The iShares iBoxx High Yield Corporate Bond ETF fell 23 cents, or 0.26%, to $86.97.

Oil futures were flat to weaker.

West Texas intermediate crude oil for March deliveries remained soft and settled 14 cents lower at $52.20 a barrel.

North Sea Brent crude oil futures for March deliveries were unchanged at $55.53 a barrel on Friday.

Distressed energy bonds were mixed over the day but mostly being driven by the continued pandemic impact and additional pressure as the Biden administration pauses new oil and natural gas leases on public lands and offshore waters in a push toward clean energy, a source said.

Laredo Petroleum Inc.’s 9½% senior notes due 2025 (Caa1/B-) slid nearly 3 points to 86 bid.

Energy Transfer Operating LP’s 3.232% junior subordinated notes due 2066 (Ba1) improved more than 1½ points to 70½ bid on Friday, a source said.

Energy bonds improve

Chesapeake Energy Corp.’s 11½% senior secured second-lien notes due 2025 climbed to 30¼ bid on Friday, up from 29¼ bid in the prior session, a market source said.

The company’s 5¾% senior notes due 2023 also edged up 1 point to 5 7/8 bid over the day.

Chesapeake Energy’s plan to exit Chapter 11 bankruptcy was approved earlier in January.

Bankrupt offshore drilling contractor Valaris plc’s 5¾% notes due 2044 saw heavy volume over the session with the bonds trading at 7 bid, flat from the prior day and down about ¾ point from Wednesday, a source said.

The company filed for Chapter 11 bankruptcy in August.

On Thursday, Valaris filed a third amended joint Chapter 11 plan of reorganization in the U.S. Bankruptcy Court for the Southern District of Texas Houston Division.

The company has an upcoming Feb. 3 plan objection deadline and a Feb. 11 court confirmation hearing.

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