Uniti notes higher after ratings change; American Airlines eyed amid stimulus shift

By James McCandless

San Antonio, Oct. 7 – The distressed debt market took an interest in the property and travel sectors on Wednesday

Uniti Group Inc.’s notes were pushed higher after receiving a ratings upgrade toward the end of Wednesday activity.

Sector peer CBL & Associates Properties, Inc.’s issues varied in direction.

Meanwhile, American Airlines Group, Inc.’s paper diverged after president Donald Trump signaled his willingness to provide airlines with a new round of stimulus.

Air carrier United Airlines Holdings, Inc.’s notes gained some traction.

In the retail space, Rite Aid Corp.’s issues were under pressure after announcing the acquisition of another pharmacy chain.

Cosmetics producer Revlon, Inc.’s paper was lifted.

As oil futures backed off of recent gains, Transocean Ltd.’s and Superior Energy Services’ notes followed while Occidental Petroleum Corp.’s issues saw mixed movements.

Uniti higher, CBL varies

Uniti’s notes were pushed higher at the midpoint of the week, traders said.

The 8¼% senior notes due 2023 gained ¼ point to close at 99¾ bid. The 7 7/8% senior secured notes due 2025 moved up ¼ point to close at 107¼ bid.

The 8¼% notes saw about $14 million on the tape.

Near the end of the day on Wednesday, the Little Rock, Ark.-based telecom-focused real estate investment trust saw a ratings upgrade from Moody’s Investors Service.

The agency improved the company’s corporate family rating, probability of default rating and issue level ratings.

The outlook was shifted to stable.

Moody’s argued that the rise in ratings is due to the improved financial flexibility of its primary customer, Windstream.

Windstream exited bankruptcy last month, triggering a settlement reached between the Windstream and Uniti.

Chattanooga, Tenn.-based property name CBL’s issues varied in direction.

The 5¼% senior notes due 2023 garnered 2 points to close at 39 bid. The 4.6% senior notes due 2024 shaved off ½ point to close at 37¼ bid.

Airlines eyed

Meanwhile, travel name American Airlines’ paper diverged, market sources said.

The 5% senior notes due 2022 fell 1 point to close at 70½ bid. The 3¾% senior paper due 2025 grabbed 2 points to close at 52¼ bid.

The Fort Worth-based airline’s structure continued to see high levels of activity as the nature of negotiations surrounding a new round of federal stimulus continued to shift.

After abruptly ordering the halt of all stimulus negotiations on Tuesday afternoon, president Trump said later that night that he would immediately sign a bill to provide another $25 billion in aid to the airline industry.

The sector has been lobbying congressional leaders and the Trump administration for the money which would keep thousands of employees from being furloughed.

After the original round of $25 billion in aid expired at the beginning of October, furloughs were sent out with the caveat that they would be reversed if new money was earmarked.

“I think that barring any actual stimulus bill being signed, I think airline tranches are going to end the week largely unchanged, potentially softer,” a trader said.

Chicago-based carrier United Airlines’ notes gained some traction.

The 5% senior notes due 2024 tacked on 1½ points to close at 89½ bid. The 4¼% senior notes due 2022 added ¾ point to close at 94½ bid.

Rite Aid trades down

In the retail space, Rite Aid’s issues were under pressure, traders said.

The 7.7% senior debentures due 2027 were docked ½ point to close at 78 bid. The 8% notes due 2026 shed ½ point to close at 100 bid.

During Wednesday’s activity, the Camp Hill, Pa.-based drug store chain announced the acquisition of an industry peer.

The company said that it entered into a definitive agreement to buy Seattle-based Bartell Drugs for $95 million.

In its press release, Rite Aid said that Bartell generates more than $550 million in revenues.

Rite Aid’s most recent earnings release showed earnings per share of 25 cents and revenues of $5.98 billion.

New York-based cosmetics producer Revlon’s paper was lifted.

The 5¾% senior notes due 2021 rose ¾ point to close at 34½ bid. The 6¼% senior notes due 2024 moved up 1 point to close at 15 bid.

Oil futures drop

As oil futures backed off of recent gains, distressed energy names followed, market sources said.

West Texas Intermediate crude oil futures for November delivery drifted down 72 cents to end the day at $39.95 per barrel.

North Sea Brent crude oil futures for December delivery capped the session at $41.99 per barrel after losing 66 cents.

Steinhausen, Switzerland-based contract driller Transocean’s notes followed futures downward.

The 8% senior notes due 2027 dropped 2¼ points to close at 27½ bid. The 7½% senior notes due 2026 slipped ¼ point to close at 22 bid.

Houston-based oilfield services provider Superior Energy’s issues were also pushed lower.

The 7¾% senior notes due 2024 gave back ½ point to close at 30¼ bid.

Houston-based independent oil and gas producer Occidental Petroleum’s paper saw mixed movements.

The 2.9% senior notes due 2024 held level to close at 87 bid. The 2.7% senior paper due 2022 dipped ¼ point to close at 96 bid.

© 2015 Prospect News.
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