Frontier notes improve after announced CEO change; AMC declines in theater sector

By James McCandless

San Antonio, Dec. 15 – As the Tuesday session in the distressed debt market came to a close, telecom and entertainment names were in focus.

Frontier Communications Corp.’s notes were higher after the company announced a change to its executive team.

Sector peer GTT Communications, Inc.’s issues were active but unchanged as it received a few ratings downgrades.

In the theater space, AMC Entertainment Holdings, Inc.’s paper was lower as the company works to raise capital.

Theater chain Cinemark Holdings, Inc.’s notes were lifted.

In the oil and gas sector, Occidental Petroleum Corp.’s bonds edged higher while Antero Resources Corp.’s and Transocean Ltd.’s paper varied in direction.

Meanwhile, air travel names American Airlines Group Inc.’s and United Airlines Holdings, Inc.’s notes improved.

Frontier higher

Frontier Communications’ notes were higher on Tuesday, traders said.

The 10½% senior notes due 2022 moved up 1 point to close at 49¾ bid. The 11% senior notes due 2025 rose 1¼ points.

Before the market opened on Tuesday, the Norwalk, Conn.-based wireline communications company announced that the company has selected telecom executive Nick Jeffery as its new president and chief executive officer.

Jeffery will take over the roles from the departing Bernie Han, who will step down on March 1.

Most recently, Jeffery was the CEO of Vodaphone UK.

Han was selected for the position in December 2019 to lead the company through the bankruptcy process.

Last month, Frontier priced a downsized $2.55 billion of secured notes.

The deal included a downsized $1.55 billion tranche of 7.5-year DIP-to-exit first-lien notes and a $1 billion tranche of 8.5-year DIP-to-exit second-lien notes.

GTT active, flat

Sector peer GTT’s issues were active but ultimately unchanged, market sources said.

The 7 7/8% senior notes due 2024, while dipping as low at 36 bid, closed the day level at 36½ bid.

After the close on Monday, the McLean, Va.-based cloud networking services provider received a ratings downgrade from Moody’s Investors Service.

The agency cut the company’s corporate family rating, probability of default rating, senior secured facilities rating and senior unsecured notes rating.

Moody’s cited GTT’s inability to come to an agreement with its lenders over a long-term cure of its reporting requirements.

GTT is in breach of those requirements due to recently discovered accounting issues that have led to its inability to file its Q2 and Q3 financial reports.

The outlook is negative, and Moody’s plans on withdrawing the company’s ratings due to lack of information.

Late Tuesday, S&P Global Ratings made a similar move to reflect GTT’s deteriorating near-term liquidity position.

AMC notes decline

In the theater space, AMC’s paper was lower as the afternoon ended, traders said.

The 12% notes due 2026 fell 1 point to close at 23 bid. The 6 1/8% senior subordinated notes due 2027 declined by 3 points to close at 14 bid.

The Leawood, Kan.-based movie theater name continued to see elevated pressure after reports indicated that it is being pushed by lenders to file for Chapter 11 bankruptcy.

Specifically, first-lien lenders are urging the company to file while its second-lien stakeholders are supporting its plans to raise capital.

AMC hopes to raise enough money by the end of the year, warning that it may run out of cash by next month.

AMC has already received a commitment for $100 million from Mudrick Capital Management in first-lien financing.

More negative attention came the company’s way on Monday after denying reports that it would pursue a merger with Plano, Tex.-based chain Cinemark.

Cinemark’s 5 1/8% senior notes due 2022 grabbed ½ point to close at 95 bid. The 4 7/8% senior notes due 2023 moved up ½ point to close at 94 bid.

Oil trends up

While oil futures were seen rising again, distressed energy tranches saw some gains, market sources said.

West Texas Intermediate crude oil futures for January delivery moved up 63 cents to end the session at $47.62 per barrel.

North Sea Brent crude oil futures for February delivery closed at $50.76 per barrel after reaching up 47 cents.

Houston-based independent oil and gas producer Occidental Petroleum’s issues followed futures upward.

The 2.9% senior notes due 2024 were lifted ½ point to close at 96 bid. The 2.7% senior notes due 2022 tacked on ½ point to close at 101¼ bid.

Denver-based producer Antero Resources’ paper varied in direction.

The 5 1/8% senior notes due 2022 lost 3 points to close at 95 bid. The 5 5/8% senior paper due 2023 garnered ¾ point to close at 96 bid.

Steinhausen, Switzerland-based contract driller Transocean’s notes also diverged.

The 7½% senior notes due 2031 sank 1 point to close at 34 bid. The 7½% senior notes due 2026 jumped up 6¾ points to close at 43¾ bid.

Airlines improve

Meanwhile, American Airlines’ issues improved, traders said.

The 5% senior notes due 2022 picked up 1½ points to close at 88½ bid. The 11¾% senior notes due 2025 inched up ¼ point to close at 114½ bid.

The Fort Worth-based commercial airline’s structure has seen a positive trend over the last month amid headlines about the development, approval and distribution of coronavirus vaccines in the United States.

While the news has provided a boost to the industry, analysts project that airlines will remain a weak sector throughout 2021.

On Friday, a Deutsche Bank analyst downgraded the company’s common stock to hold from buy.

Chicago-based carrier United Airlines’ paper was also steadily rising.

The 5% senior notes due 2024 rose ½ point to close at 100 bid. The 4¼% senior paper due 2022 reached up ½ point to close at 100½ bid.

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