Hawaiian Airlines moves out of distressed space on merger; Spirit Air up; Level 3 gains

By Cristal Cody

Tupelo, Miss., Dec. 4 – Hawaiian Airlines, Inc.’s bonds soared on Monday after the announcement the troubled airline would be acquired by Alaska Air Group, Inc.

The issuer’s 5¾% first-lien senior secured notes due 2026 (Ba3) rallied 14¼ points by the close on more than $80 million of paper changing hands.

“It traded higher than 93 but at the end of the day printed at 93,” a source said. “At the end of the month, it was 79¾.”

Hawaiian Airlines’ stock soared nearly 200% by the close.

Spirit Airlines Inc.’s 8% senior secured notes due 2025 (B2) climbed over 2 points in active trading during the session.

Meanwhile, cargo airline Western Global Airlines announced on Monday that it completed its financial restructuring after receiving bankruptcy court confirmation.

The day was decidedly weaker with stock indices mostly lower and Treasury yields moving higher, though primary action picked up across the high-grade and junk markets on Monday.

“It was risk off,” a market source said.

The iShares iBoxx High Yield Corporate Bond ETF fell 19 cents, or 0.25%, to $75.80.

The S&P 500 index closed off 0.54%.

The CBOE Volatility index rose 3.56% over the day to 13.08.

Elsewhere, Level 3 Financing, Inc.’s 4¼% senior notes due 2028 (B3/CCC+/CCC+) climbed a full point in heavy trading that hit around $15 million on Monday.

Parent Lumen Technologies, Inc.’s 4% senior secured notes due 2027 (Caa2/B/B-) also picked up 1¾ points in active supply over the session.

Hawaiian Airlines jumps

Hawaiian Airlines’ 5¾% first-lien senior secured notes due 2026 (Ba3) went out 14¼ points better at 93 bid and a yield under 10% on more than $80 million of paper traded on Monday, a source said.

In the same session a week ago, the bonds traded at 79¾ bid and a 17.26% yield on $10 million of volume.

On Sunday, Hawaiian Holdings, Inc. reported it will be acquired by Alaska Airlines in a $1.9 billion cash merger. The transaction includes $900 million of Hawaiian Airlines’ debt.

The Honolulu-based airline in October reported third-quarter losses due in part to the West Maui wildfires in August.

Closing of the merger is expected in 12 to 18 months.

Hawaiian Airlines’ shares (Nasdaq: HA) closed Monday $9.36, or 192.59%, higher at $14.22 in heavy trading.

Spirit Airlines improves

Spirit Airlines’ 8% senior secured notes due 2025 (B2) were “up 2 points” in active trading by late Monday, a source said.

The notes went out more than 2¾ points better at 74¼ bid on more than $15 million of secondary volume. The yield was 26.54%.

Spirit Airlines’ notes traded at 70¾ bid and a yield of 29.43% in the same session a week ago.

The Miramar, Fla.-based low-cost airline reported heavy third-quarter losses in October.

Level 3, Lumen bonds up

Level 3’s 4¼% senior notes due 2028 (B3/CCC+/CCC+) went out Monday 1 point higher at 39 bid on around $15 million of trading, a source said.

The bonds traded on Friday more than 1¼ points softer and more than 5 points lower on the week.

Level 3’s 3 5/8% senior notes due 2029 (B3/CCC+/CCC+) added more than 1 point to head out Monday with a 35 bid handle on $5 million of volume.

On Friday, the issue declined 1½ points to just under 34¼ bid.

Paper from parent Lumen also climbed on Monday.

Lumen’s 4% senior secured notes due 2027 (Caa2/B/B-) were 1¾ points better at 55 bid on $5.7 million of activity after going out Friday off about ¼ point.

The Denver-based telecommunications company plans to conduct a debt exchange after reaching an agreement with creditors holding about $7 billion of its debt.

December index positive

S&P U.S. High Yield Corporate Distressed Bond index one-day total returns stayed positive in the first session of December.

Returns were 0.11% on Friday, down from 0.16% in the prior session and 0.38% at the start of the prior week.

Year-to-date distressed total returns improved on Friday to 15.16% from 15.03% on Thursday and 13.81% at the week’s start.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.