U.S. Steel notes strengthen after asset sale announced; American Airlines in focus

By James McCandless

San Antonio, Dec. 24 – Manufacturing and travel names garnered the distressed debt market’s attention for the half-day.

United States Steel Corp.’s notes gained some ground after announcing the sale of a non-core real estate asset.

Meanwhile, in the travel space, American Airlines Group Inc.’s issues varied as the coronavirus stimulus bill remains unsigned.

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

Property name Washington Prime Group Inc.’s notes recovered some of the week’s losses in the wake of a reverse stock split.

Real estate company CBL & Associates Properties, Inc.’s issues diverged in direction.

As oil futures made a modest gain, Superior Energy Services, Inc.’s and Transocean Ltd.’s paper followed while Occidental Petroleum Corp.’s notes dipped.

Elsewhere, theater operator AMC Entertainment Holdings, Inc.’s issues were under water.

U.S. Steel gains

U.S. Steel’s notes gained some ground during the short day, traders said.

The 6 7/8% senior notes due 2025 reached up 2 points to close at 96¼ bid. The 6¼% senior notes due 2026 gained ½ point to close at 92 bid.

After the close on Wednesday, the Pittsburgh-based steel manufacturer announced that it had sold a Pennsylvania real estate asset.

The company sold its Keystone Industrial Port Complex to NP Falls Township Industrial, LLC for $160 million in cash.

In a statement, president and chief executive officer David Burritt said that the sale “delivers on our strategic commitment to extract incremental value from our attractive portfolio of real estate assets.”

Earlier in December, U.S. Steel said that it would purchase the remaining 50.1% stake in Big River Steel for $774 million.

In October, U.S. Steel bought the remaining stake for $700 million.

Airline notes on the move

Meanwhile, in the travel space, American Airlines’ issues varied, market sources said.

The 3¾% senior notes due 2025 tacked on 1¼ points to close at 75¾ bid. The 11¾% senior notes due 2025 lost 1¾ points to close at 111¾ bid.

The Fort Worth-based air carrier’s tranches continued to see high activity on an otherwise thin trading day as the fate of the coronavirus stimulus bill remains uncertain.

Despite having said that the package is filled with wasteful spending and not enough stimulus, president Donald Trump has not indicated whether he will sign the legislation when the bill makes its way to his desk.

As part of the package, the airline industry is expected to receive $15 billion to fund payrolls through March.

American Airlines and others are preparing to recall thousands of workers that were furloughed in October after the first round of funding expired.

Analysts have projected that any recovery for the sector will begin in the summer of 2021, after a large amount of the populace receives a Covid-19 vaccine.

Chicago-based sector peer United Airlines’ paper rose.

The 5% senior notes due 2024 added 1¼ points to close at 100 bid.

Washington Prime up

Property name Washington Prime’s notes saw a modest recovery, traders said.

The 6.45% senior notes due 2024 picked up 1 point to close at 61 bid.

This week, the Columbus, Ohio-based real estate investment trust completed a reverse stock split.

Chattanooga, Tenn.-based mall operator CBL’s issues diverged in direction.

The 5¼% senior notes due 2023 improved by ¼ point to close at 37¼ bid. The 4.6% senior notes due 2024 shaved off ¼ point to close at 37 bid.

Oil better

As oil futures saw modest gains, distressed energy tranches trended the same way, market sources said.

West Texas Intermediate crude oil futures for February delivery moved up 11 cents to settle at $48.23 per barrel.

North Sea Brent crude oil futures for February delivery capped the session at $51.29 per barrel after a 9 cent pickup.

Houston-based oilfield services provider Superior Energy’s paper followed futures.

The 7 1/8% senior notes due 2021 edged ½ point higher to close at 31 bid. The 7¾% senior paper due 2024 gained ½ point to close at 31 bid.

Steinhausen, Switzerland-based contract driller Transocean’s notes were also better.

The 7½% senior notes due 2031 reached up 1¾ points to close at 36½ bid.

Houston-based independent oil and gas producer Occidental Petroleum’s issues dipped.

The 2.9% senior notes due 2024 chalked off ¼ point to close at 95¾ bid.

AMC trades lower

Elsewhere, movie theater operator AMC’s paper was under water, traders said.

The 6 1/8% senior subordinated paper due 2027 fell ½ point to close at 13 bid.

Over the last few months, the Leawood, Kan.-based movie theater chain has been on the hunt for capital, warning the market that it would run out of cash by next month otherwise.

Earlier in the month, the company reached a deal for $100 million in new first-lien debt financing.

With that capital, the company plans to issue 22 million shares of common stock.

© 2015 Prospect News.
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