Chesapeake Energy eyed as company mulls bankruptcy; Hertz notes mixed in rental space

By James McCandless

San Antonio, April 30 – The energy sector was squarely the focus of the distressed debt space on Thursday amid improving oil futures and earnings reports.

Chesapeake Energy Corp.’s notes varied amid reports that the company is considering filing for bankruptcy.

Sector peer Antero Resources Corp.’s issues tracked higher despite posting disappointing earnings for the first-quarter.

Despite more positivity for oil futures, SM Energy Co.’s paper was under pressure while Valaris plc’s notes diverged in direction.

Meanwhile, Hertz Global Holdings, Inc.’s issues saw mixed activity a day after disclosing that it would forego recent lease payments.

In the retail space, L Brands, Inc.’s paper was on the rise while Party City Holdco. Inc.’s notes declined.

Elsewhere, Bombardier Inc.’s issues also differed in direction as it works to bring its operations back online.

Telecom name Frontier Communications Corp.’s paper trailed.

Chesapeake eyed

Chesapeake Energy’s notes varied as the day came to a close, traders said.

The 5 3/8% senior notes due 2021 lost ¾ point to close at 3½ bid. The 11½% notes due 2025 added ¼ point to close at 3 bid.

The two tranches combined saw about $53 million trading.

Late Wednesday, news broke that the Oklahoma City-based independent oil and gas producer is considering filing for Chapter 11 bankruptcy.

The company is talking with creditors in order to secure bankruptcy financing of up to $1 billion.

“Every distressed oil company will have to restructure in some way,” a trader said. “Chesapeake is the latest.”

Last week, the company adopted a shareholder rights plan that allow current shareholders to purchase common stock at a 50% discount if someone moves to acquire a 4.9% or more stake.

Antero higher

Sector peer Antero Resources’ issues tracked higher, market sources said.

The 5 1/8% senior notes due 2022 grabbed 2½ points to close at 67½ bid. The 5 5/8% senior notes due 2023 improved by 1¼ points to close at 57½ bid.

After the Wednesday close, the Denver-based oil and gas producer showed disappointing results in its first-quarter earnings.

The company showed a 13 cents per share loss, worse than the expected 2 cents per share profit.

Revenues came in at $1.32 billion, surpassing analyst expectations.

The name, a perennial favorite in the distressed energy space, has seen requisite weakness amid the collapse of commodities prices.

Oil rises

Despite continuing positivity for oil futures, distressed energy names saw non-cohesive movements, traders said.

West Texas Intermediate crude oil futures for June delivery shot up $3.78 to settle at $18.84 per barrel.

North Sea Brent crude oil futures for June delivery finished at $25.27 per barrel after a $2.73 boost.

Denver-based producer SM Energy’s paper was under pressure.

The 6 1/8% senior paper due 2022 cratered 9½ points to close at 32 bid. The 5% senior notes due 2024 shaved off ½ point to close at 32 bid.

London-based contract driller Valaris’ notes diverged.

The 4 7/8% senior notes due 2022 bounced up 9¾ points to close at 12¼ bid. The 7¾% senior notes due 2026 dipped 4¾ points to close at 8 bid.

Hertz notes mixed

Meanwhile, Hertz’s issues saw mixed activity in the Thursday session, market sources said.

The 6¼% senior notes due 2022 crashed 13 points to close at 20½ bid. The 5½% senior notes due 2024 tacked on ¾ point to close at 21¾ bid.

The Estero, Fla.-based car rental company’s structure has seen heightened activity over the last few weeks, most recently for Wednesday’s announcement that it would forego payment on its vehicle leases.

The company has been engaged in talks with creditors to stave off a bankruptcy filing by reducing its obligations.

Hertz is hoping to reach some agreement by the end of a May 4 grace period.

L Brands rises

In the retail space, L Brands’ paper was on the rise, traders said.

The 6¾% senior notes due 2036 added ½ point to close at 73½ bid. The 5¼% senior notes due 2028 gained to end at 72 bid.

Positive market sentiment has carried the Columbus, Ohio-based retailer’s structure as hopes are pinned that retail stores will reopen as state governments mull lifting their stay-at-home orders.

The company is also embroiled in a legal fight against private equity firm Sycamore Partners over an asset sale.

Sycamore is hoping to back out of an agreement to purchase a 55% stake in its Victoria’s Secret segment, arguing that the value of the company has been reduced.

Elmsford, N.Y.-based party supplies name Party City’s notes declined.

The 6 1/8% senior notes due 2023 slipped 2 points to close at 9 bid. The 6 5/8% senior notes due 2026 fell ½ point to close at 9½ bid.

Bombardier active

Elsewhere, Bombardier’s issues differed in direction, market sources said.

The 7 7/8% senior notes due 2027 picked up 1 point to close at 66¾ bid. The 6% senior notes due 2022 shed ¾ point to close at 74¼ bid.

Over the last few weeks, the Montreal-based aerospace manufacturer has been bringing its operations back online after halting production last month due to the pandemic.

As governments soften their social distancing mandates, the company has slowly revamped its European operations while recalling about 11,000 workers as it hopes to restart Canadian production.

Frontier trails

Telecom name Frontier Communications’ paper trailed, traders said.

The 10½% senior notes due 2022 shaved off ¼ point to close at 30¾ bid. The 11½% senior paper due 2025 lost 1¼ points to close at 30½ bid.

The Norwalk, Conn.-based wireline communications company’s structure has hung around the 30’s context since filing for Chapter 11 bankruptcy earlier in the month.

The filing was made after it reached an agreement with creditors that would see its debt reduced by about $10 billion.

© 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.