Hertz trades up on deadline day; Superior Energy jumps as merger abandoned

By Abigail W. Adams

Portland, Me., May 22 – The distressed debt space closed the week quietly with trading volume light during Friday’s truncated session.

While few bonds changed hands, Hertz Global Holdings, Inc.’s senior notes were posting gains as the company reached its deadline to either make a missed lease payment or reach an agreement for an extension with creditors.

There may have been an optimistic buyer of the notes. However, most are expecting the car rental company to file for bankruptcy, a source said.

While crude oil futures gave back some of their gains over the past week, Superior Energy Services Inc.’s 7¾% senior notes due 2024 jumped on the heels of its first-quarter earnings report and news it was abandoning its merger with Forbes Energy Services.

United Airlines Holdings Inc.’s senior notes were again bid up on Friday, continuing a dramatic rise seen over the past week.

Hertz’s deadline

Hertz’s senior notes were posting gains in light volume on its deadline day to either make its missed lease payment or receive an extension from creditors.

Hertz’s 6¼% senior notes due 2022 gained about 3¾ points to trade up to 16½.

However, the notes only traded 3 times in an odd lot amount of 660, a source said.

Hertz’s 6% senior notes due 2028 traded up about ½ point to 12¼. However, there were only 2 one-million-plus trades on the tape during Friday’s session, a source said.

Hertz priced a $900 million issue of the 6% notes at par in November 2019.

Friday was the deadline for Hertz to make a missed $400 million lease payment for its vehicle fleet to creditors or reach an agreement for another extension.

While news reports indicated negotiations were at an impasse, there may have been an optimistic buyer in the market, a source said.

There has been speculation majority shareholder Carl Icahn would take steps to prevent Hertz from filing for bankruptcy.

Superior gains

Superior Energy’s 7¾% senior notes due 2024 jumped on Friday on the heels of the company’s first quarter earnings report and news it was abandoning a planned merger.

The 7¾% notes were up 6½ points to close the day at 28½, a source said.

Superior reported better-than-expected earnings on Thursday.

The oilfield services company reported a net loss of $32.3 million in the first quarter, which was narrower than expected.

Revenue was $321 million which beat analyst expectations for revenue of $315 million.

The company also announced that it was abandoning its merger with Forbes Energy Services.

Superior announced in December 2019 that it was divesting its U.S. land business and merging them with Forbes Energy to create a new publicly traded company.

Superior planned to focus its operation on U.S. offshore and international markets.

However, depressed oil and gas prices made the merger on the initially negotiated terms impractical, the company said in a press release.

United Airlines up again

United Airlines’ senior notes were again bid higher on Friday, continuing a dramatic rebound seen over the past week.

United’s 5% senior notes due 2024 were up about 4½ points to close Friday at 71¼, according to a market source.

United’s 4¼% senior notes due 2022 were up 2½ points to close Friday at 77½.

The 4¼% notes gained 16 points on the week.

Optimism over an uptick in air travel fueled a spectacular rise of junk bonds from the airline industry over the past week.

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