Gulfport Energy notes sink after interest payment skipped; AMC trades actively, flat

By James McCandless

San Antonio, Oct. 19 – The distressed debt market began a new week focused on energy and entertainment names.

Gulfport Energy Corp.’s notes saw a dip after the company said that it would forego an interest payment.

While oil futures saw modest losses, Occidental Petroleum Corp.’s and Transocean Ltd.’s issues varied while Antero Resources Corp.’s paper rose.

Elsewhere, theater operator AMC Entertainment Holdings, Inc.’s notes were active but unchanged as more locations are set to open.

Sector peer Cinemark Holdings, Inc.’s issues diverged in direction.

In the travel space, Hertz Global Holdings, Inc.’s paper was under pressure in the wake of its news of debtor-in-possession financing.

Meanwhile, United Airlines Holdings, Inc.’s and American Airlines Group, Inc.’s notes marked the day with positivity.

Gulfport heads lower

Gulfport Energy’s notes traded lower on Monday, traders said.

The 6% senior notes due 2024 declined by 3 points to close at 59 bid. The 6 3/8% senior notes due 2025 gave up 2½ points to close at 59½ bid.

On Friday, the Oklahoma City-based independent oil and gas producer said that it would be skipping an interest payment on its 2024 notes.

The move triggered a 30-day grace period while the company negotiates with lenders, resulting in a forbearance agreement with certain creditors.

Following the news, the company received ratings downgrades from S&P Global Ratings and Moody’s Investors Service.

Moody’s cut Gulfport Energy’s corporate family rating, probability of default rating, speculative grade liquidity rating and an issue-level rating.

Both agencies said that the event has increased the likelihood that Gulfport will default.

“I think they will have to do something about the 2024 maturity by next year,” a trader said. “Right now, it seems manageable.”

Also, lenders to the company slashed Gulfport Energy’s borrowing base to $580 million from $700 million.

Oil names vary

While oil futures saw modest losses on Monday, distressed energy names varied, market sources said.

West Texas Intermediate crude oil futures for December delivery dropped 6 cents to close at $41.06 per barrel.

North Sea Brent crude oil futures for December delivery finished at $42.62 per barrel after a 31 cent slide.

Houston-based producer Occidental Petroleum’s issues varied.

The 2.9% senior notes due 2024 shaved off ¾ point to close at 86¾ bid. The 2.7% senior notes due 2022 held level to close at 95½ bid.

Steinhausen, Switzerland-based contract driller Transocean’s paper also saw mixed movements.

The 7½% senior paper due 2031 grabbed 1½ points to close at 15½ bid. The 7½% senior notes due 2026 closed level at 23 bid.

Denver-based E&P company Antero Resources’ notes spent the session rising.

The 5% senior notes due 2022 picked up 1¼ points to close at 91 bid. The 5% senior notes due 2025 improved by 1½ points to close at 69 bid.

AMC flat, Cinemark diverges

Elsewhere, theater operator AMC’s issues were active but unchanged, traders said.

The 12% notes due 2026, while moving up to 9¼ bid during the session, closed level at 9 bid.

Early Monday, the Leawood, Kan.-based movie theater chain announced that it would reopen its locations in New York state after governor Andrew Cuomo provided guidance for such an action over the weekend.

Last week, AMC said that unless it received a large liquidity injection it would run out of capital by the end of the year.

Over the last few months, AMC has systematically reopened its theaters across the country after having them shuttered due to the coronavirus pandemic.

Despite its push for reopenings, customer demand has been low.

Plano, Tex.-based sector peer Cinemark’s paper diverged in direction.

The 5 1/8% senior notes due 2022 picked up ¼ point to close at 87¾ bid. The 4 7/8% senior notes due 2023 dipped ½ point to close at 84 bid.

Hertz trades down

In the travel space, Hertz’s notes were under pressure, market sources said.

The 6¼% senior notes due 2022 were docked 2 points to close at 42¼ bid. The 5½% senior notes due 2024 shed 2 points to close at 42¼ bid.

On Friday, reports indicated that the Estero, Fla.-based car rental company had secured commitments for $1.65 billion of debtor-in-possession financing.

The company’s prepetition first-lien lenders are providing the financing, which is expected to be structured as a delayed-draw term loan debtor facility.

As part of the deal, up to $1 billion can be used to provide equity for vehicle acquisitions in the United States and Canada while another $800 million can be used for working capital and general corporate purposes.

Approval for the deal is subject to a hearing in bankruptcy court on Oct. 29.

The company filed for bankruptcy in May after the coronavirus pandemic dried up demand for travel.

Airlines in focus

Meanwhile, air carrier United Airlines’ issues marked the day with positivity, traders said.

The 5% senior notes due 2024 rose ¾ point to close at 88½ bid. The 4¼% senior notes due 2022 added ½ point to close at 94 bid.

Last week, the Chicago-based company reported worse-than-expected earnings for the third quarter.

The company reported a loss per share of $8.16 and revenues of $2.49 billion, falling short of analysts’ predictions.

The industry was also in focus as stimulus in the space was caught in a holding pattern amid negotiations over terms between Congress and the Trump administration.

Airlines have been pushing for a second round of $25 billion in payroll aid.

Fort Worth-based commercial travel company American Airlines’ paper was also carried higher.

The 5% senior notes due 2022 moved up ½ point to close at 69 bid. The 11¾% senior notes due 2025 gained 1 point to close at 99¼ bid.

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