AMC notes eyed amid movie industry news; American Airlines rises in travel space

By James McCandless

San Antonio, Dec. 3 – The distressed debt space was preoccupied with shifting winds in the entertainment and airline sectors on Thursday.

AMC Entertainment Holdings, Inc.’s notes varied in direction after a film studio announced a new film release policy for 2021.

Sector peer Cinemark Holdings, Inc.’s issues dipped.

In the travel space, American Airlines Group, Inc.’s paper was on the rise amid positive headlines about the return of the 737 MAX aircraft to service.

Air carrier United Airlines Holdings, Inc.’s notes diverged.

Meanwhile, in oil and gas, Callon Petroleum Co.’s issues improved despite receiving a ratings downgrade.

With oil futures strengthening, Occidental Petroleum Corp.’s paper mirrored that movement while Antero Resources Corp.’s and SM Energy Co.’s notes were pushed in different directions.

Airplane and railcar manufacturer Bombardier, Inc.’s issues were trending upward as the company preps for the sale of its rail unit.

AMC trades mixed

AMC’s notes varied in direction to open the second half of the week, traders said.

The 12% notes due 2026 improved by 5¼ points to close at 31½ bid. The 10½% notes due 2025 lost 3 points to close at 78 bid.

On Thursday afternoon, the Leawood, Kan.-based movie theater chain saw heightened attention after movie studio Warner Bros. announced a change to its film release policy for 2021.

The studio said that in the next year, it would make theatrical releases simultaneously available on the HBO Max streaming platform.

After one month, titles would leave the platform and remain in theaters.

“I think the bonds will weaken in the short term,” a trader said. “But I also think that when the pandemic is over, theaters will rebound. There is no replacing that experience. Warner is just covering their bases in terms of revenue.”

Earlier in the day, AMC filed a plan with the Securities and Exchange Commission to raise $860 million by selling 200 million shares of common stock.

The company again warned that without a capital injection, it would run out of money by the end of the year.

Plano, Tex.-based sector peer Cinemark’s issues declined.

The 5 1/8% senior notes due 2022 fell 2¼ points to close at 95½ bid. The 4 7/8% senior notes due 2023 gave back 1¾ points to close at 94¼ bid.

Airlines in focus

In the travel space, American Airlines’ paper was on the rise, market sources said.

The 5% senior notes due 2022 reached up ¾ point to close at 87¼ bid. The 11¾% senior paper due 2025 added 2 points to close at 116½ bid.

During Thursday’s activity, the Fort Worth-based commercial airline was in focus as it showcased Boeing’s 737 MAX after almost two years of being grounded.

The company hosted the first public flight of the model on Thursday, capturing headlines in anticipation of its return to flight schedules later in the month.

In late December, American Airlines intends to begin using the MAX jet for a daily flight, ramping up its usage in subsequent months.

This week, reports indicated that Congressional leaders have set aside $17 billion for the industry in the latest round of stimulus negotiations.

Chicago-based carrier United Airlines’ notes diverged.

The 5% senior notes due 2024 held level to close at 99 bid. The 4¼% senior notes due 2022 moved up ¾ point to close at 102 bid.

Callon improves

Meanwhile, in oil and gas, Callon Petroleum’s issues improved, traders said.

The 6 1/8% senior notes due 2024 tacked on 3¼ points to close at 46½ bid. The 6 3/8% senior notes due 2026 jumped up 4 points to close at 43¼ bid.

Before the market opened on Thursday, the Houston-based independent oil and gas producer received a ratings downgrade.

S&P Global Ratings downgraded all of the company’s ratings to SD and D from CC.

The shift is in reaction to the company’s recent exchange of $217 million of newly issued 9% second-lien notes due 2025 for $389 million of its existing unsecured notes.

S&P considers the move a selective default.

On Wednesday, Moody’s Investors Service cut the company’s probability of default rating, corporate family rating and its senior unsecured notes rating, arguing that it thinks that similar exchanges are on the horizon.

Oil tranches mixed

While oil futures strengthened, distressed energy tranches were pushed in different direction, market sources said.

West Texas Intermediate crude oil futures for January delivery garnered 36 cents to settle at $45.64 per barrel.

North Sea Brent crude oil futures for February delivery ended at $48.71 per barrel after a 46 cent hike.

Houston-based producer Occidental Petroleum’s paper mirrored the movements of futures.

The 2.9% senior paper due 2024 rose ½ point to close at 94½ bid. The 2.7% senior notes due 2022 gained ½ point to close at 99 bid.

Denver-based E&P company Antero Resources’ notes drifted apart.

The 5 1/8% senior notes due 2022 were lifted 1 point to close at 96½ bid. The 5% senior notes due 2025 closed level at 83 bid.

SM Energy, another Denver-based peer, saw its issues end on mixed footing.

The 5% senior notes due 2024 added 1 point to close at 69 bid. The 5 5/8% senior notes due 2025 fell 1 point to close at 62½ bid.

Bombardier trends up

Also, Bombardier’s paper trended upward, traders said.

The 7 7/8% senior notes due 2027 picked up ¾ point to close at 89 bid. The 7½% senior paper due 2024 closed level at 92½ bid.

The Montreal-based manufacturing name’s paper maintained a positive trend a day after announcing that it had received regulatory approval to finish the sale of its rail unit to French counterpart Alstom.

With those approvals achieved, the company is now on track to complete the $8.4 billion transaction.

Bombardier expects to close the transaction on Jan. 29.

Concurrently, Bombardier hired rail executive Bart Demosky as chief executive officer.

© 2015 Prospect News.
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