CalRes notes dip after bankruptcy filing; iHeartMedia up in telecom space

By James McCandless

San Antonio, July 16 – In the distressed debt session for Thursday, the market focused on energy and telecom names.

California Resources Corp.’s notes dipped after the company made a pre-packaged Chapter 11 bankruptcy filing.

Sector peer Valaris plc’s issues moved in different directions after announcing that it would be skipping two interest payments.

As oil futures weakened, Occidental Petroleum Corp.’s paper diverged while Whiting Petroleum Corp.’s notes rose, going against the trend.

In the telecom space, iHeartMedia, Inc.’s issues improved and there was news of it repaying the outstanding amounts under its credit facility.

Meanwhile, satellite operator Intelsat SA’s paper was firm as a subsidiary sought a higher payout for damages from its parent.

American Airlines Group Inc.’s notes were under pressure after warning 25,000 of its workers of a potential furlough.

Also, United Airlines Holdings, Inc.’s issues yielded mixed results.

Vehicle rental company Hertz Global Holdings Inc.’s paper also differed in direction.

CalRes dips

California Resources’ notes dipped as Thursday came to an end, traders said.

The 8% notes due 2022 shed 2½ points to close at 1½ bid. The 6% senior notes due 2024 lost 1½ points to close at 2½ bid.

Late Wednesday, the Los Angeles-based independent oil and gas producer made a pre-packaged bankruptcy filing after striking a restructuring agreement with holders of 84% of its 2017 term loans, 51% of its 2016 term loans and Elk Hills midstream joint venture partner Ares Management LP, Prospect News reported.

After the company emerges from the process, Ares would exchange its joint venture interests for equity and new CRC notes in the reorganized company while RBL facility claims would be paid in full.

The name has received commitments for more than $1 billion of debtor-in-possession financing.

According to reports, California Resources has been considering bankruptcy since March, following the collapse of oil prices.

“I think right now E&P’s are in a better position in terms of restructuring now that energy prices are crawling back up,” a trader said.

Valaris varies

Sector peer Valaris’ issues varied in direction, market sources said.

The 5.2% senior notes due 2025 tacked on ¼ point to close at 6¼ bid. The 7¾% senior notes due 2026 shaved off ½ point to close at 6½ bid.

After the close on Wednesday, the London-based contract driller announced that it would forego a pair of interest payments.

Payments would be skipped on its 4¾% senior notes due 2024 and the $11.7 million interest payment on its 5.85% senior notes due 2044, both due on July 15.

The move triggered a 30-day forbearance period.

The name said that it would continue to hold discussions with it lenders on the potential terms of a restructure.

Futures weaker

As oil futures weakened, distressed energy tranches diverged, traders said.

West Texas Intermediate crude oil futures for August delivery slipped 45 cents to finish at $40.75 per barrel.

North Sea Brent crude oil futures for September delivery capped the session at $43.37 per barrel after a 42-cent decline.

Houston-based producer Occidental Petroleum’s paper was nearly flat with a slight rise in one tranche.

The 2.9% senior paper due 2024 gave up ¾ point to close at 90¾ bid. The 2.7% senior paper due 2022 held level to close at 95¾ bid.

Denver-based peer Whiting Petroleum’s notes rose, going against the sector trend.

The 6¼% senior notes due 2023 gained ½ point to close at 18¼ bid. The 6 5/8% senior notes due 2026 picked up ¾ point to close at 18 bid.

iHeart up

In the telecom space, iHeartMedia’s issues improved, market sources said.

The 8 3/8% senior notes due 2027 moved up 2¾ points to close at 97¾ bid. The 6 3/8% notes due 2026 rose ½ point to close at 104¼ bid.

In a filing with the Securities and Exchange Commission on Thursday, the San Antonio-based media name repaid the entire $235 million outstanding under its asset-based revolver, Prospect News reported.

The repayment is connected to the company’s new $450 million senior secured term loan due 2026 which closed on Thursday.

Intelsat firm

Sector peer Intelsat’s paper firmed up as the afternoon ended, trader said.

Intelsat Jackson Holdings SA’s 5½% senior paper due 2023 tacked on ¼ point to close at 56¾ bid.

On Wednesday, news broke that SES Americom, the U.S. division of the Luxembourg-based satellite operator, is seeking $1.8 billion in damages from its parent.

The subsidiary argues that the company has breached the contract related to its handling of the sale of C-band spectrum in the United States.

The complaint alleges that the parent is not meeting its fiduciary responsibility related to its C-band operations.

Intelsat is slated to receive about $4.85 billion in revenues from the sale of C-band from a Federal Communications Commission auction slated for December.

The name filed for Chapter 11 bankruptcy in May.

AA loses, United mixed

Air traveler American Airlines’ notes were under pressure, market sources said.

The 5% senior notes due 2022 chalked off 2 points to close at 56½ bid. The 3¾% senior notes due 2025 were docked 1½ points to close at 46¼ bid.

Late in the day Wednesday, reports indicated that the Fort Worth-based carrier had sent potential furlough notices to 25,000 frontline workers.

The company said that the notices are for October, when U.S. government payroll assistance is set to expire.

Earlier in the month, the name warned of a 25% reduction in international capacity for summer 2021.

Chicago-based peer United’s issues yielded mixed results.

The 5% senior notes due 2024 gained ½ point to close at 80½ bid. The 4¼% senior notes due 2022 dipped ½ point to close at 85¼ bid.

Hertz up, flat

Car renter Hertz’s paper also differed in direction, traders said.

The 6¼% senior paper due 2022 closed level at 39 bid. The 5½% senior paper due 2024 fell ½ point to close at 39 bid.

The Estero, Fla.-based vehicle rental company’s structure has seen improvements over the last month as the market latches onto positive developments related to the coronavirus.

Most recently, a positive wave was sparked on Wednesday after biotech firm Moderna said that a potential vaccine was ready for advanced trials.

The company filed for bankruptcy in May.

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