Wesco Aircraft under pressure post-earnings; AMC active; China Evergrande losses mount

By Abigail W. Adams

Portland, Me., Sept. 1 – While the overall high-yield secondary space was unchanged on Wednesday, several distressed debt names were under pressure.

Incora, a company created through the merger of Wesco Aircraft Holdings Inc. and Pattonair, saw its junk bonds drop upwards of 5 points following disappointing earnings and the resignation of the company’s chief financial officer.

Losses continued to mount for China Evergrande Group’s junk bonds after the company announced a default may be on the horizon.

While there was little price movement in the notes, AMC Entertainment Holdings, Inc.’s 12% second-lien senior secured notes due 2026 (Ca/C) were active with stock under pressure during Wednesday’s session.

Wesco Aircraft tanks

Wesco Aircraft, which now operates as Incora, saw its junk bonds fall more than 5 points during Wednesday’s session following disappointing earnings and the resignation of the company’s CFO.

The 8½% senior notes due 2024 dropped 5 points to close the day at 90, according to a market source.

There was $22 million in reported volume.

The 9% senior notes due 2026 were also down about 5 points to close the day at 90¼ with more than $15 million on the tape.

The aerospace supply chain company reported disappointing numbers and weak guidance, sources said.

In addition, the company reported that chief financial officer Timothy Gallagher would be resigning.

Incora was formed through the merger of Wesco Aircraft with Platinum Equity’s portfolio company Pattonair in 2020.

Wolverine Escrow is the issuing entity of the junk bonds.

China Evergrande sinks

Losses continued to mount for China Evergrande’s junk bonds as the company warned a default may be on the horizon.

The China-based real estate developer’s 8¼% senior notes due 2022 dropped 8½ points to close the day just north of 37, according to a market source.

The 7½% senior notes due 2023 fell more than 9 points to 29.

The 8¾% senior notes due 2025 dropped 3¼ points to close the day at 29¾.

China Evergrande subsidiary Scenery Journey Ltd.’s 11½% senior notes due 2022 dropped 4½ points to close the day at 31.

After delaying payments to some of its contractors, the company warned that it may default on its debt.

The company has about $88 billion in debt with 42% maturing in a year, The Wall Street Journal reported.

The sell-off in Evergrande has already spread to the debt issued by other China-based property developers.

There is concern about a contagion spreading to other areas of the market if Evergrande defaults on its debt.

AMC active

AMC’s 12% second-lien senior secured notes due 2026 (Ca/C) were active although little changed on Wednesday.

The 12% notes continued to trade on a 90-handle and closed the day at 90½, according to a market source.

There was more than $14 million in reported volume.

While the movie chain operator’s 12% notes were little changed on Wednesday, the company’s stock tanked 7% following an analyst downgrade.

Macquarie downgraded AMC stock to Underperform from Neutral and set a price target of $6.

AMC’s stock closed Wednesday at $43.69.

© 2015 Prospect News.
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