AMC bonds soar; distressed energy paper, prison operators GEO, CoreCivic decline

By Cristal Cody

Tupelo, Miss., Jan. 27 – AMC Entertainment Holdings, Inc.’s bonds remain heavily traded with the company’s 10½% first-lien senior secured notes due 2025 (Caa2/CCC) up more than 15 points from a week ago.

The 10½% notes due 2025 climbed another 3½ points on Wednesday to 98 bid, a source said.

The notes traded Jan. 19 at 82½ bid.

AMC’s 12% second-lien senior secured notes due 2026 (Ca/C) saw heavy trading over the day with the notes quoted up 11½ points at 64½ bid.

The 12% notes have rallied over the front half of the week after trading Friday at 39½ bid.

AMC’s bonds have been stronger over the past two weeks since the company announced additional funding raised, including $917 million of new equity and debt capital that was reported on Monday.

The company’s stock closed up 301.21% at $19.90 on Wednesday after closing Tuesday at $4.96 a share.

“Overnight, the equity market cap has increased four times,” a source noted. “I’ve never seen a stock go up 300% in one day. They raised money and they’ve got liquidity.”

Energy bonds mostly soften

Distressed energy bonds were mostly soft on Wednesday as president Joe Biden announced executive actions, including a “pause” on new oil and natural gas leases on public lands or in offshore waters, pending a comprehensive review and reconsideration of federal oil and gas permitting and leasing practices.

The government also will consider whether to adjust royalties associated with coal, oil and gas resources extracted from public lands and offshore waters to account for corresponding climate costs.

Last week, the secretary of the U.S. Interior Department under the Biden administration implemented a 60-day suspension on new oil and gas leasing and drilling permits for U.S. lands and waters.

Bonds from Nabors Industries Ltd., Energy Transfer Operating LP and EQM Midstream Partners LP softened over the day, a source said.

Callon Petroleum Co.’s 6¼% senior notes due 2023 (Caa2/D) fell 2¼ points to 74¾ bid.

Coal producer Peabody Energy Corp.’s 6 3/8% senior secured notes due 2025 (Caa1/CCC-) were quoted at 59¾ bid in light trading, down from 61½ bid in heavy secondary volume on Tuesday, a source said.

Oil futures remained mixed a second day on Wednesday.

West Texas intermediate crude oil for March deliveries rose 24 cents to settle at $52.85 a barrel.

North Sea Brent crude oil futures for March deliveries fell 10 cents to settle the day at $55.81 a barrel.

Market tone weakened with stock indices all down more than 2% on the day.

The Federal Reserve made no rate changes following its monetary policy meeting that ended Wednesday.

The iShares iBoxx High Yield Corporate Bond ETF declined during the session, falling 25 cents to $86.94 after losing 13 cents on Tuesday.

The S&P U.S. High Yield Corporate Distressed Bond index ended Tuesday up 0.2% and with month- and year-to-date total returns of 8.01%.

Chesapeake Energy better

In other distressed energy trading, Chesapeake Energy Corp.’s bonds headed higher on Wednesday, a source said.

The company’s 7% senior notes due 2024 improved to 5 bid in the heaviest trading volume seen since Friday when the notes were quoted at 4¾ bid.

Chesapeake Energy’s 11½% senior secured second-lien notes due 2025 rose ½ point over the day to 29 bid.

The company’s plan to exit bankruptcy and eliminate about $7 billion of debt under the reorganization was approved earlier in January.

The Chapter 11 bankruptcy case was filed on June 28 before the U.S. Bankruptcy Court for the Southern District of Texas.

GEO, CoreCivic down

Meanwhile, bonds from private prison operators slipped on Tuesday and continued to mostly soften over Wednesday’s session, sources said.

Biden issued an executive order on Tuesday to phase out the Justice Department’s use of private prisons for federal prisoners.

GEO Group Inc.’s bonds were a “mixed bag” on Wednesday, a market source said.

“It looks like the big move was yesterday; today was a smaller move,” the source said.

The company’s bonds fell about 1½ to 6 points on Tuesday.

GEO’s 6% senior notes due 2026 (B1/B+) declined more than 2 points on Wednesday to trade at about 70¾ bid, down nearly 7 points from where the issue was bid in the same session a week ago.

Last week, GEO Group announced that the Federal Bureau of Prisons had chosen to not renew the contract for the company’s Moshannon Valley Correctional Facility in Pennsylvania when the contract expires on March 31.

The contract generated about $42 million in annual revenue for GEO, which said it expects to market the facility to other federal and state agencies.

The 4¾% notes due 2027 (Ba1/BB) issued by CoreCivic, Inc., formerly known as the Corrections Corp. of America, headed out Tuesday down nearly 6½ points and traded more than 1½ points weaker on Wednesday at just under 78 bid, the source said. The notes traded Monday at 86¼ bid.

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