GEO bonds remain soft; AMC extends rally; Shelf Drilling lower; Transocean up

By Cristal Cody

Tupelo, Miss., May 27 – GEO Group Inc.’s bonds continued to decline in heavy trading on Thursday on the heels of S&P Global Ratings’ ratings downgrade of the private prison operator.

GEO’s 5 1/8% senior notes due 2023 (B2/CCC) fell about 1½ points to the 85 bid area, a source said.

The notes dropped 2 points on Tuesday and declined 3 points on Wednesday.

GEO’s 5 7/8% senior notes due 2024 (B2/CCC) were quoted off more than 1 point at the 71 bid area on more than $4.6 million of trading supply.

The notes declined more than 2½ points on Tuesday and traded about 2 points lower on Wednesday.

GEO’s 6% senior notes due 2025 (B2/CCC) also were softer at the 59¾ bid area, down from 60 7/8 bid on Wednesday. The notes fell more than 3 points on Tuesday.

S&P downgraded the company’s bond ratings by two notches on Tuesday.

In January, president Joe Biden instructed the U.S. Department of Justice to not renew contracts with privately operated prison operators, including the Boca Raton, Fla.-based real estate investment trust that specializes in secure and processing facilities and electronic monitoring.

S&P said on Tuesday that GEO has borrowed substantially all of its remaining revolving credit facility availability and is building large cash balances in a strategy usually seen ahead of a debt exchange.

The company has recently retained Lazard Financial Advisory and Skadden, Arps, Slate, Meagher & Flom LLP to assess alternatives for its capital structure.

AMC notes climb

AMC Entertainment Holdings, Inc. extended a rally in its bonds and stock on Thursday, a source said.

The company’s 12% second-lien senior secured notes due 2026 (Ca/C) climbed 2¼ points to 97¾ bid on $18 million of paper traded.

The 2026 notes traded at 91½ in the same session a week ago.

AMC’s 5¾% senior subordinated notes due 2025 (Ca/C) improved 2 3/8 points to 76 3/8 bid on over $2 million of secondary volume.

The notes are up more than 3 points week to date.

AMC’s stock soared 35.58% to close at $26.52 after ending Wednesday more than 19% higher.

The Leawood, Kan.-based movie theater owner raised approximately $428 million in a registered offering of 43 million shares of class A common stock earlier in May.

AMC reported in January that it had raised or signed commitment letters to receive $917 million of new equity and debt capital and issued $100 million of guaranteed first-lien secured notes due 2026.

Shelf Drilling softens

Overall market tone was mixed nearing the Memorial Day holiday weekend.

The iShares iBoxx High Yield Corporate Bond ETF closed down 4 cents at $87.21.

Oil prices settled higher.

North Sea Brent crude oil futures for July deliveries improved 59 cents to settle at $69.46 a barrel.

West Texas intermediate crude oil benchmark futures for July deliveries added 64 cents to settle at $66.85 a barrel.

In distressed energy issues, Shelf Drilling Holdings Ltd.’s 8¼% senior notes due 2025 (Caa3/CCC+) dropped 1¾ points to 76¾ bid in light trading totaling $1 million, a source said.

Offshore driller Transocean Inc.’s 7½% notes due 2031 (C/CCC-/) traded up more than 1½ points near the 59½ bid area on less than $1.5 million of trading volume.

Endo notes improve

Meanwhile, pharmaceuticals maker Endo Finance LLC’s 6% senior notes due 2028 (Caa2/CCC+) improved to 69¼ bid on more than $15.7 million of secondary action over the day, a source said.

The notes were last seen on Wednesday at 66¼ bid and traded a week ago at the 72½ bid area.

The issue was quoted at the 77 bid range as May kicked off.

Parent Dublin-based pharmaceuticals maker Endo International plc reported weaker first-quarter earnings and revenue earlier in May.

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