Hertz notes eyed after delisting warning; PetSmart heads lower on subsidiary earnings

By James McCandless

San Antonio, June 10 – The distressed debt space spent Wednesday focused on travel and retail names.

Hertz Global Holdings, Inc.’s notes varied in direction after receiving a delisting warning on its common stock.

Retailer PetSmart, Inc.’s issues shifted lower after its e-commerce subsidiary reported lukewarm earnings for the first quarter.

Sector peer L Brands, Inc.’s paper also trailed.

Meanwhile, satellite operator Intelsat SA’s notes were carried higher after winning approval for $1 billion in DIP financing.

Wireline communicator Frontier Communications Corp.’s issues were under water.

As oil futures saw a rise, SM Energy Co.’s and Oasis Petroleum Inc.’s paper tracked higher as Occidental Petroleum Corp.’s notes weakened.

Elsewhere, mall property name CBL & Associates Properties, Inc.’s notes slipped off of recent gains.

Hertz flat to higher

Hertz’s notes varied in direction through Wednesday activity, traders said.

The 6¼% senior notes due 2022 gained 2½ points to close at 40¼ bid. The 5½% senior notes due 2024 held level to close at 39½ bid.

Early Wednesday, the Estero, Fla.-based car rental company announced that it had received a delisting notice for its common stock from the New York Stock Exchange.

The NYSE decided on delisting after the company filed for Chapter 11 bankruptcy last month.

Hertz said that it would appeal the decision, calling for a hearing to determine an outcome, warning that there is no assurance for a continued listing or whether the stock will have any equity value.

The company’s debt securities have been pushed higher in recent days amid widespread market optimism on an economic recovery from the coronavirus pandemic.

As more domestic traveling is expected, air and land travel companies have seen rallies.

“It’s been ripping this week,” a trader said. “But the bankruptcy could wipe out the equity.”

PetSmart, L Brands lower

Retail name PetSmart’s issues shifted lower, market sources said.

The 8 7/8% senior notes due 2025 shaved off ¼ point to close at 102 bid. The 5 7/8% senior notes due 2025 dipped ¼ point to close at 101¾ bid.

After the close on Tuesday, the Phoenix-based pet supplies retailer’s e-commerce subsidiary Chewy, Inc. reported first-quarter earnings results.

The company showed a loss of 12 cents per share, slightly worse than the 11 cents per share loss predicted by analysts.

Revenues beat analyst estimates at $1.62 billion.

The subsidiary went public in June 2019 after a protracted legal fight over its private equity transfer.

“PetSmart has been off the radar for a little bit,” a trader said.

Columbus, Ohio-based sector peer L Brands’ paper also trailed.

The 6¾% senior notes due 2036 chalked off 1 point to close at 88½ bid. The 5¼% senior notes due 2028 declined by 1 point to close at 87 bid.

Intelsat higher

Meanwhile, satellite operator Intelsat’s notes were carried higher, traders said.

Intelsat Jackson Holdings SA’s 5½% senior notes due 2023 garnered ½ point to close at 59½ bid. Intelsat (Luxembourg) SA’s 8 1/8% senior notes due 2023 moved up ½ point to close at 6 bid.

Late Tuesday, news broke that the Luxembourg-based satellite operator received final court approval to obtain $1 billion in debtor-in-possession financing, Prospect News reported.

The approved amount includes an initial $500 million draw.

The company said that the approval would support its operations, including the costs associated with the accelerated clearing of C-band spectrum.

An auction for the C-band to be held by the Federal Communications Commission will be held in December.

Up to 80.58% of the DIP financing commitments will be made available to holders of pre-bankruptcy secured debt.

Norwalk, Conn.-based wireline communicator Frontier’s issues were under water.

The 10½% senior notes due 2022 were docked ½ point to close at 38 bid. The 11% senior notes due 2025 gave up 2¾ points to close at 36½ bid.

Oil trends up

As oil futures saw another rise, distressed energy names trended the same way, market sources said.

West Texas Intermediate crude oil futures for July delivery rose 66 cents to close at $39.60 per barrel.

North Sea Brent crude oil futures for August delivery settled at $41.73 per barrel after a 55 cent gain.

Houston-based independent oil and gas producer SM Energy’s paper mirrored the movement of futures.

The 5% senior paper due 2024 improved by 2¾ points to close at 61 bid. The 5 5/8% senior notes due 2025 inched up ¼ point to close at 58½ bid.

Oasis Petroleum, another Houston-based producer, saw its notes follow the trend.

The 6 7/8% senior notes due 2022 picked up 1 point to close at 29½ bid.

Houston-based peer Occidental Petroleum’s issues weakened.

The 2.9% senior notes due 2024 lost ¼ point to close at 85¾ bid. The 2.7% senior notes due 2022 fell 1½ points to close at 94¼ bid.

CBL slips

Elsewhere, mall property name CBL’s paper slipped off of recent gains, traders said.

The 5¼% senior notes due 2023 shed 1 point to close at 30½ bid. The 4.6% senior paper due 2026 moved down 1½ points to close at 29¼ bid.

The Chattanooga, Tenn.-based mall-focused real estate investment trust’s paper has been swept up in the market’s optimism about an economic recovery.

As governments continue to lift stay-at-home mandates, retailers like Macy’s have announced hundreds of store reopenings.

Recently, the company reported that it had only collected 27% of its April rent and expects 25% to 30% for May.

© 2015 Prospect News.
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