Energy and airlines surge; Occidental notes in focus; United Airlines paper active

By Abigail W. Adams

Portland, Me., May 18 – Monday was a strong day for distressed energy and airline names as crude oil futures surged and airlines saw some positive headlines.

Occidental Petroleum Corp.’s senior notes were on the rise in high-volume activity even after the termination of a previously planned asset sale.

Denbury Resources Inc.’s and Transocean Inc.’s senior notes were also posting gains.

United Airlines Holdings Inc.’s, Delta Air Lines Inc.’s and American Airlines Group Inc.’s senior notes were active and up multiple points on the heels of upbeat travel data from the Transportation and Security Administration.

Energy improves

Monday was a strong day for the energy sector as WTI crude oil futures surged to a two-month high.

Occidental Petroleum’s senior notes were up multiple points in high-volume activity.

The Houston-based hydrocarbon exploration company’s 2.7% senior notes due 2022 were up more than 2 points to close Monday at 88 1/8, according to a market source.

The notes were active with more than $23 million in reported volume.

Occidental’s 2.7% senior notes due 2023 rose 1½ points to 83½. The 3½% senior notes due 2029 were up almost 2 points to 67, a source said.

Occidental Petroleum’s notes were posting gains even as the sale of its Ghana asset to Total SA fell apart.

The sale was part of its plan to deleverage some of the debt it took on as part of its acquisition of Anadarko Petroleum.

However, the notes were on the rise as crude oil futures rallied on Monday.

Crude oil futures traded up to a two-month high with the soon-to-expire WTI crude oil contract for June trading as high as $33.32 before settling at $31.89, an increase of $2.39 or 8.12%.

Crude oil prices surged as demand grows amid the slow reopening of the economy and production cuts continue.

Rising crude oil futures lifted several distressed names in the energy space.

Denbury Resources’ 9¼% senior notes due 2022 were up 2¾ points to 31 on Monday.

Transocean’s 7½% senior notes due 2026 were up 2½ points to 48½.

Airlines take flight

Monday was also a strong day for the battered down junk bonds of several airlines.

United Airlines and American Airlines saw their issues improve following upbeat travel data from the Transportation and Security Administration.

United’s 4 7/8% senior notes due 2025 were up 5 points to 56, according to a market source.

The 5% senior notes due 2024 were up more than 4½ points to 59.

The 4¼% senior notes due 2022 rose 4½ points to 65.

Delta Air Lines’ 3.8% senior notes due 2023 gained 5 7/8 points to close Monday on a 77-handle, according to a market source.

The 2.9% senior notes due 2024 were up 5 3/8 points to 77 3/8.

Delta’s 4 3/8% senior notes due 2028 were up 5 points to 71¾.

American Airlines’ 5% senior notes due 2022 were up 4 points to 39¾, according to a market source.

The airlines were posting gains after the TSA reported an uptick in travelers passing through its checkpoints.

Airlines have been badly battered by the coronavirus pandemic and have seen an onslaught of negative headlines as famed investor Warren Buffett and Boeing CEO David Calhoun question their future viability.

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