Bombardier notes drop after sale update; Occidental Petroleum higher in energy sector

By James McCandless

San Antonio, Aug. 10 – Manufacturing and energy names saw their distressed tranches hold focus as Monday ended.

Bombardier Inc.’s notes dropped after the company acquiring its railroad segment said it would consider second-quarter results in negotiations.

In the energy space, Occidental Petroleum Corp.’s issues pushed higher in the run-up to its second-quarter earnings results.

In the oil and gas sector, Valaris plc’s paper improved as Antero Resources Corp.’s and Whiting Petroleum Corp.’s notes varied in direction.

Meanwhile, air carrier American Airlines Group Inc.’s issues were lifted on the back of positive travel data.

Sector peer United Airlines Holdings, Inc.’s paper diverged.

Pharmaceuticals name Mallinckrodt plc’s notes saw mixed results in the wake of a ratings downgrade.

Property holder CBL & Associates Properties, Inc.’s issues differed.

Bombardier declines

Bombardier’s notes dropped on Monday, traders said.

The 7 7/8% senior notes due 2027 declined by 2½ points to close at 76 bid. The 6% senior notes due 2026 were docked 3¼ points to close at 87½ bid.

The Montreal-based air and rail manufacturer’s structure was under pressure on Monday on news that the buyer of its rail unit would factor in second-quarter results amid closing negotiations.

For the second quarter, the company reported a loss of 30 cents per share and revenues of $2.7 billion.

Sales dropped by 37%.

In a statement, Alstom said that it would “take into account the consequences of these operating and financial developments” in upcoming talks.

Last week, E.U. anti-trust regulators approved the sale, which is expected to close in the first half of 2021.

Occidental higher

In the energy space, Occidental Petroleum’s issues pushed higher, market sources said.

The 2.9% senior notes due 2024 picked up ½ point to close at 94¾ bid. The 2.7% senior notes due 2022 rose ½ point to close at 97½ bid.

Before the Monday afternoon release of its second-quarter results, the Houston-based independent oil and gas producer’s issues were positive.

After the close, the company reported a loss of $1.76 per share, wider than the $1.70 per share loss that analysts expected.

Revenues also missed predictions at $2.93 billion.

“The second quarter paints a pretty grim picture,” traders said.

The company also reported a $6.6 billion write-down for the quarter, which it blamed on the collapse of energy prices.

Oil names vary

Despite strength in oil futures, distressed energy names were non-cohesive, traders said.

West Texas Intermediate crude oil futures for September delivery moved up 72 cents to settle at $41.94 per barrel.

North Sea Brent crude oil futures for October delivery finished at $44.99 per barrel after a 59 cent gain.

London-based contract driller Valaris’ paper improved.

The 5.2% senior notes due 2025 tacked on 1 point to close at 5 bid.

Denver-based producer Antero Resources’ notes varied in direction.

The 5 1/8% senior notes due 2022 held level to close at 82 bid. The 5 5/8% senior notes due 2023 shaved off ½ point to close at 73¾ bid.

Whiting Petroleum, another Denver-based E&P, saw its issues move on separate tracks.

The 6¼% senior notes due 2023 closed level at 18½ bid. The 6 5/8% senior notes due 2026 lost ¼ point to close at 18¼ bid.

Airlines in focus

Meanwhile, air carrier American Airlines’ paper was lifted, market sources said.

The 5% senior notes due 2022 garnered 1 point to close at 63¼ bid. The 3¾% senior paper due 2025 moved up ¼ point to close at 49¾ bid.

The airline industry, including the Fort Worth-based carrier, saw general positivity on Monday after the U.S. Transportation Security Administration released air travel data from the previous week.

On Sunday, the TSA reported that 831,000 passengers were screened at airports last week.

The agency reported a daily average number of travelers of about 686,000.

Also last week, the sector was bolstered on news that a group of U.S. Senators and president Donald Trump have proposed a new round of federal aid.

Chicago-based sector peer United Airlines’ notes were seen diverging.

The 5% senior notes due 2024 gave up ½ point to close at 86½ bid. The 4¼% senior notes due 2022 grabbed 1½ points to close at 91½ bid.

Mallinckrodt mixed

Pharmaceuticals name Mallinckrodt’s issues saw mixed results, traders said.

The 5¾% senior notes due 2022 inched up ¼ point to close at 25½ bid. The 5½% senior notes due 2025 declined by ¼ point to close at 23¼ bid.

Last week, the Staines-upon-Thames, England-based drug maker received ratings downgrades issued by S&P Global Ratings.

The agency cut its overall rating to CCC- from CCC, lowered issue-level ratings and put all of its ratings on CreditWatch with negative implications.

S&P said that in its view, the company will file for Chapter 11 bankruptcy or make a distressed exchange within six months.

CBL notes active

Property holder CBL’s paper differed in direction, market sources said.

The 5¼% senior notes due 2023 added ¾ point to close at 22¾ bid. The 4.6% senior paper due 2024 shed ¾ point to close at 23 bid.

Late last week, the Chattanooga, Tenn.-based real estate investment trust issued its second-quarter earnings report.

The company showed a 5 cents per share profit and revenues of $124.2 million.

In July, 49% of its billed rents were collected.

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