Oasis Petroleum notes boosted after bankruptcy news; Bombardier eyed in manufacturing

By James McCandless

San Antonio, Sept. 30 – The Wednesday session in the distressed debt market saw shifting ground in the energy space.

Oasis Petroleum Inc.’s notes were boosted after news broke that the company filed for Chapter 11 bankruptcy.

Sector peer Superior Energy Services’ issues also picked up steam after the company reached a restructuring agreement with holders that will result in a bankruptcy filing.

As oil futures saw improvements, Occidental Petroleum Corp.’s paper followed while Antero Resources Corp.’s notes varied.

Meanwhile, manufacturing name Bombardier Inc.’s notes diverged in direction after more doubt was cast on the potential sale of its aerostructures unit.

Iron name Cleveland-Cliffs Inc.’s issues improved as ratings agencies reacted to the company’s recent acquisition news.

American Airlines Group, Inc.’s and United Airlines Holdings, Inc.’s paper gained on the eve of the expiration of federal payroll protection for the industry.

Elsewhere, Hertz Global Holdings, Inc.’s issues were under pressure in the wake of a recent executive shakeup.

Oasis boosted

Oasis Petroleum’s notes were boosted by the end of the day, traders said.

The 6 7/8% senior notes due 2022 rose 7¼ points to close at 23¾ bid. The 6¼% senior notes due 2026 jumped up 7½ points to close at 23½ bid.

About $64 million of the two tranches combined were on the tape.

On Wednesday morning, the Houston-based independent oil and gas producer filed for Chapter 11 bankruptcy, Prospect News reported.

The company said it has entered into a restructuring support agreement with substantially all of its revolving credit facility lenders and with holders of 52% of the aggregate principal amount of its bonds on a comprehensive pre-prepackaged restructuring plan to strengthen its balance sheet and significantly reduce its debt.

After the restructuring process, the company intends to reduce its debt by $1.8 billion.

In connection with the agreement, Oasis has received a commitment for $450 million in debtor-in-possession financing from its existing lenders.

Last week, the company elected to forego an interest payment on its 2022 notes.

Superior Energy up

Sector peer Superior Energy’s issues also picked up steam, market sources said.

The 7 1/8% senior notes due 2021 gained 7¾ points to close at 26 bid. The 7¾% senior notes due 2024 tacked on 5¾ points to close at 23½ bid.

During Wednesday activity, the Houston-based oilfield services name entered into a restructuring support agreement with a group of its senior noteholders that collectively hold or control 69.2% of the company’s senior unsecured notes, Prospect News reported.

The proposed recapitalization would deleverage 100% of the company’s long-term debt and related interest, provide access to additional financing and establish a capital structure that the company believes will allow it to thrive in a low-commodity-price environment.

As part of discussions with noteholders, the two parties are considering separating the business into two companies.

“The trend for energy right now is to cut costs and slim down,” a trader said. “I wouldn’t be surprised if the split idea becomes a reality.”

Oil trends better

As oil futures saw improvements, some distressed energy names followed, traders said.

West Texas Intermediate crude oil futures for November delivery moved up 93 cents to settle at $40.22 per barrel.

North Sea Brent crude oil futures for December delivery closed at $42.30 per barrel after hopping up 74 cents.

Houston-based producer Occidental Petroleum’s paper moved upward.

The 2.9% senior notes due 2024 improved by ½ point to close at 84 bid. The 2.7% senior notes due 2022 tacked on ½ point to close at 93½ bid.

Denver-based E&P Antero Resources’ 5% senior notes due 2025 closed level at 62¼ bid.

Bombardier diverges

Meanwhile, manufacturing name Bombardier’s issues diverged in direction, market sources said.

The 7½% senior notes due 2025 slipped ¼ point to close at 75¼ bid. The 7 7/8% senior notes due 2027 closed level at 74¼ bid.

On Tuesday, the prospective buyer of the Montreal-based air and rail manufacturer’s aerostructures segment cast more doubt on the closing of the sale.

Spirit AeroSystems Holdings, Inc. said in a Securities and Exchange Commission filing that the $500 million deal may not close by the Oct. 31 deadline, which could spark litigation between the two entities.

Last week, the potential buyer said that conditions to the deal’s closing include an absence of legal barriers, receipt of third-party consents and no major adverse changes to the business, including fuselage and wing factories.

Cleveland-Cliffs improves

Cleveland-Cliffs’ paper was seen improving, traders said.

The 6¼% senior notes due 2040 shot up ½ point to close at 77 bid. The 5 7/8% senior paper due 2027 inched up ¼ point to close at 93¼ bid.

After announcing the $1.4 billion acquisition of a competitor earlier this week, ratings agencies have taken action on the Cleveland-based iron ore miner.

Moody’s Investors Service said it placed all of its ratings on review for downgrade following the announcement.

The agency said that the review would focus on “expected operational efficiencies and ability to optimize production at the steel production sites.”

Late in the day on Wednesday, Fitch Ratings shifted its outlook on the name to positive from negative.

Airline bonds take flight

Air carrier American Airlines’ notes gained, market sources said.

The 5% senior notes due 2022 moved up ¼ point to close at 68¼ bid. The 11¾% senior notes due 2025 rose ¼ point to close at 97 bid.

The modest gains for the Fort Worth-based travel name come on the eve of the expiration of a $25 billion payroll protection aid program that was earmarked for the industry in March.

While the sector has pushed the federal government to pass legislation for a second round of that funding, negotiations in Congress have stalled despite support in the Senate and the White House.

The company has warned of thousands of furloughs if aid is not renewed.

As a holdover, the airline recently closed on a $5.5 billion loan from the Treasury.

Chicago-based peer United Airlines’ issues followed the upward trend.

The 5% senior notes due 2024 reached up ¼ point to close at 88¼ bid. The 4¼% senior notes due 2022 gained 1¼ points to close at 93½ bid.

Hertz down

Elsewhere, car renter Hertz’s paper was under pressure, traders said.

The 6¼% senior notes due 2022 edged ¾ point lower to close at 45 bid.

Late Monday, the Estero, Fla.-based vehicle rental company announced the resignation of its chief financial officer.

After two months on the job, the company said that Eric Esper would step down for a new opportunity.

Executive vice president of finance Kenny Cheung will take over the role, with Esper staying on as the chief accounting officer until Nov. 1.

© 2015 Prospect News.
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