Hertz notes eyed after analyst comments; American Airlines declines in travel space

By James McCandless

San Antonio, June 24 – In the midpoint of the week, the distressed space turned its attention on volume leaders in the travel sector.

Hertz Global Holdings, Inc.’s notes varied after analyst comments on how to potentially utilize its inventory during the bankruptcy process.

Meanwhile, in air travel, American Airlines Group Inc.’s issues dropped after cancelling a term loan offering and refocusing on bonds.

Sector peer United Airlines Holdings, Inc.’s paper also ceded ground.

In housewares, Tupperware Brands Corp.’s notes improved after the company announced partial results for an ongoing tender offer.

In the energy space, oil futures saw a drop, mirrored by Chesapeake Energy Corp.’s, Whiting Petroleum Corp.’s and Occidental Petroleum Corp.’s issues.

Elsewhere, manufacturer Spirit AeroSystems Holdings, Inc.’s paper diverged in direction a day after being asked to tamper down aircraft parts production for Boeing.

Air and rail name Bombardier Inc.’s notes slipped.

Hertz rises

Hertz’s notes were varied throughout Wednesday activity, traders said.

The 6¼% senior notes due 2022 picked up ¼ point to close at 27¼ bid. The 5½% senior notes due 2024 declined by ½ point to close at 26½ bid.

Early Wednesday, the Estero, Fla.-based car rental company’s structure received heightened attention after analysts at Jefferies suggested that auto sellers CarMax and AutoNation could potentially buy up the bulk of Hertz’s used car inventory to raise capital for its bankruptcy.

In a note, the analysts said that the sale could raise up to $3 billion.

Hertz garnered negative attention over the last two weeks after attempting to sell $500 million of additional common stock to fund its bankruptcy process, warning potential investors that the stock would likely be worthless upon its exit from bankruptcy.

“As they look for more capital, they always have the cars in their pocket,” a trader said. “That stock offering was a real sideshow.”

After the Securities and Exchange Commission started to make inquiries into the deal, the company shelved the plan to issue stock last week.

AA, United drops

Meanwhile, in air travel, American Airlines’ issues dropped, market sources said.

The 5% senior notes due 2022 cratered 8½ points to close at 60 bid. The 3¾% senior notes due 2025 lost 3½ points to close at 53 bid.

The Fort Worth-based airline terminated plans for a $500 million four-year senior secured term loan B on Wednesday, Prospect News reported.

Initially part of its multi-faceted capital raise, the company instead shifted focus to its now-upsized senior secured notes offering to $2.5 billion from $2 billion.

After the close, American priced the 11¾% five-year senior secured bullet notes at 99 to yield 12.013%.

Also on deck is an upsized $1 billion offering of five-year convertible notes and 74.1 million in additional common stock at $13.50 per share.

Chicago-based sector peer United Airlines’ paper also ceded ground.

The 5% senior notes due 2024 chalked off 2¾ points to close at 83¾ bid. The 4¼% senior notes due 2022 fell 1½ points to close at 88 bid.

Tupperware up

Housewares seller Tupperware’s notes improved by the end of the day, traders said.

The 4¾% senior notes due 2021 tacked on 1¾ points to close at 59 bid.

On Wednesday morning, the Orlando, Fla.-based multi-level marketer announced that it has accepted $97.4 million of notes under its two tender offers to purchase for cash up to $175 million of its $600 million outstanding 2021 notes, Prospect News reported.

The first offer expiration date had been extended from 11:59 p.m. ET on June 22.

The second offer is slated to expire at 11:59 p.m. ET on July 8.

The offering was originally announced on June 11.

Oil names dip

In the energy space, a drop for oil futures led many distressed energy names lower, market sources said.

West Texas Intermediate crude oil futures for August delivery were slashed $2.36 to settle at $38.01 per barrel.

North Sea Brent crude oil futures for August delivery finished at $40.31 per barrel after a $2.32 spill.

Oklahoma City-based independent oil and gas producer Chesapeake Energy’s issues spent the day under water.

The 11½% notes due 2025 fell 2¼ points to close at 15¼ bid. The 6 1/8% senior notes due 2021 dipped 1½ points to close at 4¼ bid.

Denver-based producer Whiting Petroleum’s paper followed the sector trend.

The 6¼% senior paper due 2023 trailed by ½ point to close at 15½ bid. The 6 5/8% senior notes due 2026 shaved off ¼ point to close at 15¾ bid.

Houston-based producer Occidental Petroleum’s notes weakened.

The 2.9% senior notes due 2024 lost 1¼ points to close at 87½ bid. The 2.7% senior notes due 2022 gave back ¼ point to close at 94¾ bid.

Spirit diverges

Elsewhere, manufacturer Spirit AeroSystems’ issues diverged in direction, traders said.

The 4.6% senior notes due 2028 moved down ½ point to close at 83 bid. The 3.95% senior notes due 2023 tacked on ¾ point to close at 87 bid.

The Wichita, Kan.-based aerospace manufacturer’s structure saw negative attention on Tuesday after news broke that large customer Boeing Co. had requested it lower the scope of production on 737 MAX airplane parts.

Spirit is now tasked to deliver 72 completed sets of parts, lower than an earlier agreement of 125 sets reached in May.

The 737 MAX has been grounded since March 2019.

Montreal-based air and rail name Bombardier’s paper slipped.

The 8¾% senior paper due 2021 declined by 2¼ points to close at 80¼ bid. The 7½% senior notes due 2025 dived 6¾ points to close at 63 bid.

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