GEO bonds continue to recover following downgrade; AMC notes decline; Transocean improves

By Cristal Cody

Tupelo, Miss., June 1 – GEO Group Inc.’s bonds continued to gain in secondary trading on Tuesday after declining about 4 to 5 points in the prior week following S&P Global Ratings’ downgrade.

GEO’s bonds had gains on Friday ahead of the Memorial Day holiday weekend after declining early in the week.

The 5 7/8% senior notes due 2024 (B2/CCC) climbed to 73½ bid in heavy trading after going out Friday up nearly 1½ points at 72¾ bid, a source said.

The bonds traded in the 74¾ bid area in the same session a week ago and at the 83¼ bid area at the start of the year.

GEO’s bonds had softened since January after President Biden instructed the U.S. Department of Justice to not renew contracts with privately operated prison operators.

S&P downgraded the private prison operator on May 25 and dropped its bond ratings by two notches, noting the company has borrowed all of its remaining revolving credit facility availability and is building large cash balances in a strategy that usually precedes a debt exchange.

The Boca Raton, Fla.-based real estate investment trust that specializes in secure and processing facilities and electronic monitoring has retained Lazard Financial Advisory and Skadden, Arps, Slate, Meagher & Flom LLP to assess various alternatives for its capital structure.

AMC bonds soften

AMC Entertainment Holdings, Inc.’s bonds softened in distressed secondary trading on Tuesday, a source said.

AMC’s 12% second lien senior secured notes due 2026 (Ca/C) fell about 1¾ points to 97 bid.

The notes headed out Friday up 1 point at 98¾ bid and 7 points better on the week.

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

In January, AMC 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.

Transocean edges up

Overall market tone was positive in the first session back after the holiday weekend.

The iShares iBoxx High Yield Corporate Bond ETF closed up 26 cents at $87.15.

Oil prices were unchanged to higher.

North Sea Brent crude oil futures for July deliveries settled unchanged a second session at $69.46 a barrel.

West Texas Intermediate crude oil benchmark futures for July deliveries added $1.40 to settle at $67.72 a barrel.

In distressed energy issues, offshore driller Transocean Inc.’s 7½% senior notes due 2026 (Ca) rose about ¼ point to the 78¾ bid area during the session, a source said.

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