Occidental notes weaken as tender offer ends; J.C. Penney trades up in retail space

By James McCandless

San Antonio, Sept. 11 – Closing out the week, the distressed debt market remained focused on energy and retail names.

Occidental Petroleum Corp.’s notes were seen declining after the company reported final results of a tender offer for eight series of notes.

With oil futures ending the week trending negatively, Valaris plc’s issues declined as well while Transocean Ltd.’s paper was active but flat and Antero Resources Corp.’s notes varied.

In the retail space, J.C. Penney Co., Inc.’s issues improved in the wake of news that it has agreed to be sold to two mall operators.

Sector peer Revlon, Inc.’s paper diverged in direction.

Meanwhile, air carrier American Airlines Group Inc.’s notes were under pressure while United Airlines Holdings, Inc.’s issues ended with mixed results.

Movie theater chain AMC Entertainment Holdings, Inc.’s paper gained ground.

Occidental loses

Occidental Petroleum’s notes headed lower to cap the week, traders said.

The 2.9% senior notes due 2024 gave up 1¾ points to close at 87½ bid. The 2.7% senior notes due 2022 lost 2¼ points to close at 94¾ bid.

After the close on Friday, the Houston-based independent oil and gas producer gave the final results for its tender offer for eight series of notes, Prospect News reported.

The company said holders tendered an additional $95,000 principal amount of its 4.1% notes due 2021 after the early deadline and before the final deadline.

About $2.1 billion were accepted through the offer.

Previously, Occidental modified the priority orders for the floating-rate August 2022 notes and 3 1/8% 2022 notes.

The offer was first announced on Aug. 12.

To fund the offering, Occidental priced an upsized $3 billion of senior notes in three tranches.

Oil trends lower

With oil futures ending the week trending negatively, distressed energy names saw non-cohesive movements, market sources said.

West Texas Intermediate crude oil futures for October delivery strung together a 3 cent bump to close at $37.33 per barrel.

North Sea Brent crude oil futures for November delivery settled at $39.83 per barrel after a 23 cent cut.

London-based contract driller Valaris’ issues declined.

The 7¾% senior notes due 2026 fell 1¼ points to close at 5 bid.

Steinhausen, Switzerland-based driller Transocean’s paper was active but ultimately unchanged.

The 7½% senior paper due 2031, while drifting as low as 16 bid during the day, firmed up to close level at 17 bid. The 6½% senior paper due 2020 ended level at 83¾ bid.

Denver-based producer Antero Resources’ notes varied throughout the day.

The 5 5/8% senior notes due 2023 shaved off ¼ point to close at 78¼ bid. The 5% senior notes due 2025 jumped up 3 points to close at 69¾ bid.

J.C. Penney up

In the retail space, J.C. Penney’s issues improved, traders said.

The 5 7/8% senior notes due 2023 picked up ½ point to close at 32 bid.

This week, the Plano, Tex.-based department store chain announced that it had struck a sale agreement in principle with mall operators Brookfield Property Group and Simon Property Group.

Through a court-supervised sale process, the company has agreed to sell its retail and operating assets for $1.75 billion.

The company expects to enact a stalking horse asset purchase agreement, which may lead to the formation of a separate real estate investment trust and a property holding company.

The group expects to emerge from the bankruptcy process in time for the 2020 holiday season.

“It’s about having positive numbers to report after the season,” a trader said. “They have to show that they can still get revenue.”

J.C. Penney filed for bankruptcy in May after the coronavirus pandemic forced it to close its retail locations, hampering income.

New York-based cosmetics producer Revlon’s paper diverged in direction.

The 5¾% senior notes due 2021 fell 1¼ points to close at 30¾ bid. The 6¼% senior paper due 2024 tacked on ¾ point to close at 15 bid.

Airlines eyed

Meanwhile, air carrier American Airlines’ notes were under pressure, market sources said.

The 11¾% senior notes due 2025 dipped ¼ point to close at 96¾ bid.

As the airline industry creeps toward the expiration of federal payroll aid in October, the Fort Worth-based airline said this week that it may go to the Treasury Department to ask for more funds.

Chief financial officer Derek Kerr said at a conference that the company might ask for a larger share of the original $25 billion in aid that was earmarked for the sector in March.

Some peers have not used up their allotted amounts or said they would not use the money at all.

American Airlines has warned that up to 40,000 jobs are at risk of furlough or involuntary layoff if a second aid package does not pass.

Chicago-based United Airlines’ issues ended Friday with mixed results.

The 5% senior notes due 2024 fell ½ point to close at 90 bid. The 4¼% senior notes due 2022 closed level at 94 bid.

AMC gains

Movie theater chain AMC’s paper gained ground, traders said.

The 12% notes due 2026 rose ¼ point to close at 42 bid.

Over the last two weeks, the Leawood, Kan.-based entertainment name’s structure has seen heightened attention as it completed an initiative to reopen 70% of its locations.

The company’s theaters had been shuttered to meet government mandates on slowing the spread of the coronavirus.

After this past weekend ended and box office results were released, AMC was marred by negative headlines as attendance numbers failed to impress the market.

© 2015 Prospect News.
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