United Airlines notes in focus after fee drop; AMC notes improve after asset sale news

By James McCandless

San Antonio, Aug. 31 – The distressed debt session started a new week focused on names most hampered by the persistent presence of the coronavirus.

United Airlines Holdings, Inc.’s notes varied in direction after announcing that it would permanently scrap booking change fees.

Sector peer American Airlines Group Inc.’s issues also diverged.

Elsewhere, AMC Entertainment Holdings, Inc.’s paper saw better levels amid news that it had reached an agreement to sell its Baltic assets.

In the retail space, J.C. Penney Co., Inc.’s notes yielded mixed results as it proposes an ownership deal with lenders.

Cosmetics producer Revlon, Inc.’s issues moved on separate tracks.

With oil futures beginning the week with a dip, Whiting Petroleum Corp.’s and Valaris plc’s paper followed while Occidental Petroleum Corp.’s notes differed.

Meanwhile, mall owner Washington Prime Group Inc.’s notes drifted lower.

Airlines in focus

United Airlines’ notes varied in direction at the week’s start, traders said.

The 5% senior notes due 2024 rose ¾ point to close at 90¼ bid. The 4¼% senior notes due 2022 slipped 1½ points to close at 91½ bid.

On Sunday, the Chicago-based air carrier announced that it would be permanently scrapping its $200 fee that it charged for a passenger to change a flight within the United States.

The move comes as the industry tries to drum up demand that has remained soft since the onset of the coronavirus pandemic.

“United and the sector were dragged down for that in the markets,” a trader said. “It shows just how low demand is and puts pressure on other airlines to toss the fee, which we’ve already seen in American and Delta.”

As the company waits for a potential second round of federal payroll aid, it has warned that thousands of employees could be furloughed or laid off in October.

Fort Worth-based sector peer American Airlines’ issues also diverged.

The 5% senior notes due 2022 held level at 65½ bid. The 11¾% senior notes due 2025 tacked on ¼ point to close at 96¾ bid.

AMC better

Elsewhere, theater name AMC’s paper saw better levels, market sources said.

The 12% notes due 2026 improved by 1½ points to close at 37 bid. The 6 1/8% senior subordinated paper due 2027 jumped up 4½ points to close at 32½ bid.

The Leawood, Kan.-based movie theater chain’s structure was pushed upward amid news that it had sold its assets in the Baltic region for $77 million.

Nine theaters in Latvia, Lithuania and Estonia were part of the sale agreement with UP Invest.

The company moved for the sale as part of its overall initiative to boost liquidity as revenue has dried up during the pandemic.

Concurrently, AMC is pushing for the reacquisition of 10 theaters in the United States that it sold to a now-bankrupt New Vision Theaters.

Throughout August, AMC has reopened hundreds of theaters across the country after prolonged closures.

J.C. Penney, Revlon mixed

In the retail space, J.C. Penney’s notes yielded mixed results, traders said.

The 7.4% senior debentures due 2037 fell ¼ point to close at 1 bid. The 8 5/8% notes due 2025 moved up 1¼ points to close at 2¼ bid.

During the Monday session, reports indicated that the Plano, Tex.-based bankrupt department store chain has proposed to sell its assets out of bankruptcy to its largest lenders.

The company’s bankruptcy lawyer told the court on Monday that negotiations have stalled with several outside bidders.

Within the next 10 days, the company hopes to hammer out a deal that would give lenders equity in exchange for their debt claims.

“The process has been dragged out a bit,” a trader said. “The bonds are trading so poorly so the lenders should be somewhat happy.”

In May, J.C. Penney filed for bankruptcy, receiving the final push off the ledge after government mandates to curb the spread of Covid-19 forced retailers to close physical locations.

New York-based cosmetics maker Revlon’s issues moved on separate tracks.

The 5¾% senior notes due 2021 gained 1½ points to close at 29½ bid. The 6¼% senior notes due 2024 dropped 4 points to close at 11 bid.

Oil eyed

Oil futures began the week with a dip, market sources said.

West Texas Intermediate crude oil futures for October delivery slipped 36 cents to settle at $42.61 per barrel.

North Sea Brent crude oil futures for November delivery capped the day at $45.28 per barrel after shedding 53 cents.

Denver-based independent oil and gas producer Whiting Petroleum’s paper declined.

The 6¼% senior notes due 2023 chalked off ¼ point to close at 23¾ bid. The 6 5/8% senior paper due 2026 gave up 1 point to close at 23 bid.

London-based contract driller Valaris’ notes also saw pressure.

The 5.2% senior notes due 2025 declined by 1½ points to close at 6 bid. The 7¾% senior notes due 2026 shed ¼ point to close at 7¼ bid.

Houston-based E&P Occidental Petroleum’s issues differed.

The 2.9% senior notes due 2024 lost ¾ point to close at 92¼ bid. The 2.7% senior notes due 2022 picked up ½ point to close at 98½ bid.

Washington Prime drifts

Meanwhile, mall owner Washington Prime’s paper drifted lower, traders said.

The 6.45% senior notes due 2024 shed ¼ point to close at 53¼ bid.

At the tail end of last week, despite receiving a ratings downgrade, the Columbus, Ohio-based real estate investment trust’s paper strung together a few days of gains.

Fitch Ratings cut the ratings or the company and its operating partnership, Washington Prime Group, LP, including the long-term issuer default ratings and issue-level ratings.

The agency said that an exchange or restructuring is likely within the next 12 months.

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