PetSmart notes active on refinancing; American Airlines, PBF Energy paper sinks

By Abigail W. Adams

Portland, Me., Oct. 26 – The distressed debt space was active on Monday with the overall high-yield market weak on renewed concern over a second wave of the Covid-19 pandemic, failed U.S. economic stimulus negotiations and uncertainty surrounding the election.

While the notes were little changed on the day, PetSmart Inc.’s senior notes were active as the company launched a new megadeal.

American Airlines Group, Inc.’s senior notes continued their decline with hope for a pre-election stimulus package dashed.

PBF Holding Co. LLC’s notes continued their downward spiral with earnings to be announced on Thursday.

PetSmart active

PetSmart’s senior notes were active but unchanged on the day after the pet supply retailer launched a new megadeal.

PetSmart’s 5 7/8% senior notes due 2025 closed Monday at 102 7/8.

The 7 1/8% senior notes due 2023 closed the day at 101 5/8.

The 8 7/8% senior notes due 2025 closed the day at 104 3/8.

PetSmart launched a $2.35 billion two-tranche offering on Monday, which includes a $1.2 billion tranche of seven-year secured notes and a $1.15 billion tranche of eight-year unsecured notes.

Proceeds, together with proceeds from a new term loan and a $1.3 billion contribution to PetSmart’s equity, will be used to redeem, repurchase and repay the full amount of its existing term loans and the three tranches of notes, the company said in a press release.

The 5 7/8% notes and 8 7/8% notes became callable in June with first call at 102.938 and 104.438, respectively.

The notes were priced to finance PetSmart’s acquisition of Chewy Inc.

As part of the refinancing, PetSmart plans to sell all shares of Chewy Inc., completely divesting from the company it acquired in 2017.

American Airlines drops

American Airlines’ senior notes were taking a hit on Monday as the last glimmer of hope for a pre-election stimulus package faded.

American’s 3¾% senior notes due 2025 dropped 2½ points to 50¾.

The 5% notes due 2022 sank 2¼ points to 69. The 11¾% notes fell 1¾ points to 98¼.

The notes gave back all of their gains from the previous week.

The notes were on the rise late last week following a better-than-expected earnings report with the 11¾% notes topping par.

However, the notes were selling off alongside the broader market on Monday.

“There’s no stimulus, and people are worried about a second wave,” a source said.

PBF notes sink

PBF Energy’s senior notes continued their downward spiral with the company’s earnings report just days away.

While volume was light, the 6% senior notes due 2028 dropped 3½ points to close the day at 48.

PBF’s 9¼% senior notes due 2025 were active and selling off the previous week with the notes trading down to 94.

The energy company is slated to report earnings on Thursday.

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