Occidental notes decline after earnings report; Adient rises on first-quarter results

By James McCandless

San Antonio, May 6 – More names releasing earnings were the prime focus of the distressed debt market in the middle of the week.

Occidental Petroleum Corp.’s notes declined after releasing its earnings report and cutting its production budget.

A negative day for oil futures meant similar losses for Whiting Petroleum Corp.’s issues while SM Energy Co.’s and Gulfport Energy Corp.’s paper varied.

Elsewhere, auto parts maker Adient plc’s notes rose after beating expectations on earnings for the first quarter.

Sector peer Tenneco Inc.’s issues picked up steam after announcing that it completed amendments to its credit facility.

Meanwhile, Hertz Global Holdings, Inc.’s paper moved up a day after news of its forbearance agreement.

In the retail space, L Brands, Inc.’s and Revlon, Inc.’s notes were both under pressure.

Occidental declines

Occidental Petroleum’s notes were in decline in Wednesday’s session, traders said.

The 2.9% senior notes due 2024 were docked 2½ points to close at 77½ bid. The 2.7% senior notes due 2022 lost 2¾ points to close at 88¼ bid.

After the close on Tuesday, the Houston-based independent oil and gas producer released its first-quarter earnings report.

The company reported a loss of 52 cents per share, slightly worse than the 50 cents per share loss projected by analysts.

Revenues came in at $6.45 billion, surpassing analyst predictions.

As part of its report, the company announced a $1.4 billion write-down related to a pipeline investment, reduced its budget by $2.4 billion to $2.6 billion and withdrew its guidance for the rest of the year.

“Everyone in the E&P space has had to give themselves a haircut,” a trader said.

The company has recently hired financial advisers to handle its debt load.

Oil down

A negative day for oil futures meant a downward trend for distressed energy tranches, market sources said.

West Texas Intermediate crude oil futures for June delivery shed 57 cents to settle at $23.99 per barrel.

North Sea Brent crude oil futures for July delivery finished at $29.72 per barrel after a $1.25 loss.

Denver-based producer Whiting Petroleum’s issues also shifted lower.

The 6¼% senior notes due 2023 declined by 1½ points to close at 9 bid. The 6 5/8% senior notes due 2026 fell 2 points to close at 7½ bid.

SM Energy, another Denver-based producer, saw its paper vary in direction.

The 5% senior notes due 2024 shaved off ¾ point to close at 30 bid. The 6 1/8% senior notes due 2022 added ¼ point to close at 37¾ bid.

Oklahoma City-based peer Gulfport Energy’s notes also diverged.

The 6% senior notes due 2024 gained ¾ point to close at 54 bid. The 6 3/8% senior notes due 2025 dipped 1 point to close at 49 bid.

Adient rises

Elsewhere, automotive name Adient’s issues were on the rise, traders said.

The 4 7/8% senior notes due 2026 picked up 1¼ points to close at 77¼ bid.

On Tuesday, the Dublin-based auto parts maker saw positive results in the release of its second-quarter earnings report.

The company’s reported a profit of 62 cents per share, almost double the analyst expectation of a 32 cents per share profit.

Revenues edged out predictions at $3.51 billion.

Late last month, the company priced a $600 million offering of senior secured notes.

Tenneco up

Sector peer Tenneco’s paper picked up steam throughout the session, market sources said.

The 5% senior notes due 2026 jumped up 3½ points to close at 45 bid.

The Lake Forest, Ill.-based powertrain manufacturer announced on Wednesday that its lenders have agreed to amend the financial covenant ratios of its senior secured credit facility, lifting the maximum leverage ratio and decreasing the minimum interest coverage ratio requirements in the company’s senior credit facility, Prospect News reported.

The revised amendments are meant to help the company to weather the coronavirus pandemic without falling out of compliance with the facility’s terms.

Hertz higher

Meanwhile, auto rental name Hertz’s notes moved up, traders said.

The 6¼% senior notes due 2022 tacked on 1¼ points to close at 18¼ bid. The 5½% senior notes due 2024 added ¾ point to close at 15¼ bid.

On Wednesday, the Estero, Fla.-based car rental company’s structure continued to see high activity, most recently because of its Tuesday announcement that it had reached a forbearance agreement with its creditors.

The agreement sets a May 22 deadline for lease payments that it chose to skip last month.

The company said that the extension gives it time to develop a financial strategy that is better aligned with the economic impact of the Covid-19 outbreak.

Over the last month, the company has engaged financial advisers in order to find ways to stave off a Chapter 11 bankruptcy filing.

L Brands, Revlon off

In the retail space, L Brands’ issues were under pressure, market sources said.

The 6¾% senior notes due 2036 declined 1¼ points to close at 71½ bid. The 5¼% senior notes due 2028 slid ½ point to close at 70 bid.

The Monday close brought news that the Columbus, Ohio-based retailer and private equity firm Sycamore Partners had mutually agreed to terminate the sale of a majority stake in L Brands’ Victoria’s Secret segment.

In February, Sycamore agreed to pay $525 million for a 55% stake in the unit, then backed away last month after claiming that the company had lost significant value.

New York-based cosmetics producer Revlon’s paper was also pushed downward.

The 5¾% senior notes due 2021 declined by 6¾ points to close at 49 bid. The 6¼% senior paper due 2024 lost 1½ points to close at 18½ bid.

© 2015 Prospect News.
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