Hertz notes trade lower as lease payment skipped; SM Energy rises despite earnings loss

By James McCandless

San Antonio, April 29 – The distressed debt market was a tug of war between the economic effects of the coronavirus and the optimism of a post-pandemic economy on Wednesday.

Hertz Global Holdings, Inc.’s notes dropped after the company announced that it elected to skip recent lease payments on its vehicles.

The 7 5/8% notes due 2022 declined by 6 points to close at 37 bid. The 6% senior notes due 2028 fell 4½ points to close at 18½ bid.

About $28 million of the tranches combined changed hands.

On Wednesday morning, news broke that the Estero, Fla.-based car rental company disclosed that it did not make payments related to its vehicle leases.

The company has begun talks with lenders to reduce its obligations and avoid a bankruptcy filing.

“The nonpayment seems close to a default,” a trader said. “If there isn’t any federal money coming it looks like a bankruptcy is in the cards.”

In the oil and gas space, SM Energy Co.’s issues rose despite posting a loss as the energy sector was carried higher.

The 6 1/8% senior notes due 2022 improved by 7 points to close at 41½ bid. The 5% senior notes due 2024 jumped up 7½ points to close at 32½ bid.

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