Hertz notes decline after financing news; PetSmart lower following ratings actions

By James McCandless

San Antonio, Nov. 6 – Distressed debt trading focused on travel and retail names on Friday.

Hertz Global Holdings, Inc.’s notes dropped after the company announced that it had secured a $4 billion fleet financing commitment.

Meanwhile, in retail, PetSmart, Inc.’s issues shifted lower as the company saw the attention of two ratings agencies.

Sector peer Revlon, Inc.’s paper was under water as the company announced the extension of an early tender deadline.

Air and rail manufacturer Bombardier, Inc.’s notes varied in direction after the release of its third-quarter earnings.

Property owner Washington Prime Group, Inc.’s issues fell after reporting a loss for the third quarter.

Mall name CBL & Associates Properties, Inc.’s paper improved.

While oil futures declined for a second straight day, Occidental Petroleum Corp.’s and Antero Resources Corp.’s notes followed as Laredo Petroleum, Inc.’s issues diverged.

Hertz drops

Hertz’s notes dropped during the Friday session, traders said.

The 6¼% senior notes due 2022 sank 1¼ points to close at 38½ bid. The 5½% senior notes due 2024 shaved off ¾ point to close at 38½ bid.

Nearing the close on Thursday, the Estero, Fla.-based car rental service announced that it has secured commitments for fleet financing comprising $4 billion and has filed a motion for approval, Prospect News reported.

Following the approval, and together with the up to $1 billion of Hertz’s debtor-in-possession financing that may be used for equity in the fleet financing subsidiary, the company will have access to up to $5 billion in total funding to support its fleet financing needs.

“That’s the one thing they need,” a trader said. “Without the fleet they cannot generate cash.”

Hertz plans to refresh its rental car fleet in 2021 and anticipates the purchase of roughly 229,000 vehicles.

The hearing for the approval is scheduled for Nov. 24.

PetSmart softens

Meanwhile, in the retail space, PetSmart’s issues shifted lower, market sources said.

The 8 7/8% senior notes due 2025 lost ½ point to close at 101¼ bid. The 5 7/8% senior notes due 2025 weakened by ¾ point to close at 101¾ bid.

During Friday’s activity, the Phoenix-based pet supplies retailer was subject to the attention of two ratings agencies.

S&P Global Ratings cut the company’s issuer rating to B- from B while leaving the B rating on the secured debt and CCC+ rating on its senior unsecured debt unchanged.

The agency said that the change reflects the company’s decision to pull a refinancing deal due to unfavorable market conditions.

Despite its failure to act, S&P expects PetSmart to complete a refinancing before its term loan becomes current in March.

For similar reasons, Moody’s Investors Service changed its outlook on the company to stable from positive.

Revlon down

Sector peer Revlon’s paper was under water, traders said.

The 5¾% senior notes due 2021 chalked off ½ point to close at 35¾ bid.

On Friday morning, the New York-based cosmetics producer again extended the early tender deadline and withdrawal deadline for an exchange offer.

The offer by subsidiary Revlon Consumer Products Corp. is to exchange any and all outstanding $342,785,000 5¾% senior notes due Feb. 15, 2021 for cash or a combination of cash and ABL FILO term loans and new BrandCo second-lien term loans.

The early tender deadline and withdrawal deadline were extended to 11:59 p.m. ET on Nov. 10, the expiration of the offer, from 11:59 p.m. ET on Nov. 5.

As of 11:59 p.m. ET on Nov. 5, $124,713,000 of the notes had been validly tendered for exchange.

Bombardier varies

Air and rail manufacturer Bombardier’s notes varied in direction, market sources said.

The 7½% senior notes due 2025 slipped ¼ point to close at 77¾ bid. The 7 7/8% senior notes due 2027 held level to close at 77½ bid.

On Thursday, the Montreal-based transport builder issued its earnings report for the third quarter.

The company reported revenues of $3.5 billion, representing a 5% year-over year decrease due to market conditions amid the coronavirus pandemic.

Free cash flow usage was $706 million during the quarter, with the objective of breaking even in the last half of the year.

The company’s chief executive officer, Eric Martel, said that he expects layoffs as part of plans to trim excess capacity.

Bombardier is also seeing negative headlines stemming from an investigation from the U.K. Serious Fraud office over the sale of aircraft to an Indonesian carrier.

Washington Prime weakens

Property owner Washington Prime’s issues were spotted falling, traders said.

The 6.45% senior notes due 2024 chopped off 2¾ points to close at 52½ bid.

After the close on Thursday, the Columbus, Ohio-based real estate investment trust added its Q3 earnings report to the market’s pile.

The company reported a loss of 23 cents per share, wider than the 2 cents per share loss from this period last year.

Revenues were reported at $123.7 million.

The company said that it collected 87% of rental income for the quarter.

Concurrently, Washington Prime announced that it would enter into a 1:9 reverse common share split by the end of the year.

Chattanooga, Tenn.-based mall operator CBL’s paper improved.

The 5¼% senior notes due 2023 improved by 1 point to close at 38¼ bid. The 4.6% senior paper due 2024 added 2¼ points to close at 39¼ bid.

Oil slips

As oil futures declined for a second straight day, distressed energy tranches mostly followed, market sources said.

West Texas Intermediate crude oil futures for December delivery lost $1.65 to cap the week at $37.14 per barrel.

North Sea Brent crude oil futures for January delivery finished at $39.45 per barrel after erasing $1.48.

Houston-based independent oil and gas producer Occidental Petroleum’s notes moved with futures.

The 2.9% senior notes due 2024 shed ¾ point to close at 89½ bid. The 2.7% senior notes due 2022 gave back ¾ point to close at 96½ bid.

Denver-based producer Antero Resources’ issues also tracked lower.

The 5 1/8% senior notes due 2022 dipped ¼ point to close at 95¾ bid. The 5 5/8% senior notes due 2023 lost 1 point to close at 87½ bid.

Tulsa, Okla.-based E&P company Laredo Petroleum’s paper diverged.

The 10 1/8% senior notes due 2028 pushed up ¼ point to close at 49½ bid. The 9½% senior notes due 2025 shed 1½ points to close at 52 bid.

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