Hertz notes improve as large equity investor exits; Occidental jumps as investors sue

By James McCandless

San Antonio, May 28 – The Thursday session in the distressed debt space saw a continued focus on travel-related names.

Hertz Global Holdings, Inc.’s notes moved up amid news that large equity investor Carl Icahn sold his entire stake in the company.

In oil and gas, Occidental Petroleum Corp.’s issues jumped up after news broke that shareholders and creditors had filed a lawsuit against the name.

Sector peer SM Energy Co.’s paper tracked higher after announcing that it extended the expiration of exchange offers.

A better day for oil futures served as the background for varying movements in Whiting Petroleum Corp.’s and Gulfport Energy Corp.’s notes

Meanwhile, air travel name United Airlines Holdings, Inc.’s issues were mixed after signaling future cost cutting measures.

Retail chain J.C. Penney Co., Inc.’s paper ended with gains after the company announced that it would reopen 150 retail locations.

Cosmetics name Revlon, Inc.’s notes marked the day with an improvement.

Elsewhere, Intelsat SA’s issues diverged a day after opting into a Federal Communications Commission C-band clearing plan.

Hertz trades up

Hertz’s notes were seen moving up by the end of the session, traders said.

The 6¼% senior notes due 2022 rose 1¼ points to close at 17¾ bid. The 5½% senior notes due 2024 improved by ¾ point to close at 17½ bid.

The Estero, Fla.-based car rental company’s notes saw modest rises despite negative headlines springing up after the Wednesday close and continuing into Thursday.

News broke late Wednesday that Icahn had sold his entire stake in the name, 55.34 million common shares, at a loss of about $1.6 billion.

“It’s a different asset class so the bondholders aren’t concerned too much about that,” a trader said. “I think their focus is on reopening measures and the bankruptcy process – like how their car inventory might affect the used car market.”

A group of creditors have been arguing in bankruptcy court that Hertz’s fleet of cars lose value rapidly, posing difficulty to the process.

Occidental jumps

In the oil and gas space, Occidental Petroleum’s issues jumped upward, market sources said.

The 2.9% senior notes due 2024 added ¾ point to close at 79½ bid. The 2.7% senior notes due 2022 moved up 1 point to close at 92 bid.

On Wednesday afternoon, reports indicated that a group of the Houston-based independent oil and gas producer’s stockholders and creditors has filed a lawsuit against the name.

The group alleges that it has suffered billions of dollars in losses because the company did not disclose its inability to handle negative shifts in the commodities market after acquiring Anadarko Petroleum.

Like others in the energy space, the company has seen higher losses and cost cutting measures as the coronavirus pandemic weakens demand.

“They’re making noise but I’m not sure there’s much to recoup,” a trader said.

SM Energy higher

Sector peer SM Energy’s paper tracked higher, traders said.

The 6¾% senior notes due 2026 grabbed 1½ points to close at 51½ bid. The 6 5/8% senior paper due 2027 tacked on 2 points to close at 51 bid.

Early Thursday, the Houston-based oil and gas producer said it extended the expiration time of its previously announced exchange offers to 5 p.m. ET on May 29 from midnight ET at the end of May 27, Prospect News reported.

As of 5 p.m. ET on May 27, about $252.7 million of notes had been tendered for exchange.

Five series of notes are part of the exchange.

Tenders may no longer be withdrawn.

Oil names vary

As oil futures saw a better day, distressed energy names varied in direction, market sources said.

Crude suppliers saw an uptick in supply while crude oil stockpiles increased slightly.

West Texas Intermediate crude oil futures for July delivery added 90 cents to settle at $33.71 per barrel.

North Sea Brent crude oil futures for July delivery ended the session at $35.29 per barrel after a 55 cent lift.

Denver-based peer Whiting Petroleum’s notes varied in direction.

The 6¼% senior notes due 2023 held level to close at 11¼ bid. The 6 5/8% senior notes due 2026 shaved off ½ point to close at 11¼ bid.

Oklahoma City-based producer Gulfport Energy’s issues also saw mixed activity.

The 6% senior notes due 2024 closed level at 58½ bid. The 6 3/8% senior notes due 2025 improved by ½ point to close at 51 bid.

United Airlines active

Meanwhile, air travel name United Airlines’ paper differed in direction, traders said.

The 5% senior paper due 2024 picked up 1¼ points to close at 76¾ bid. The 4¼% senior notes due 2022 shed ¼ point to close at 82¼ bid.

Following the close on Wednesday, the Chicago-based airline announced that it would be shuffling its management team as it prepares for cost cutting measures on anticipated lower revenue.

Chief executive officer Scott Kirby told employees that the company’s outlook remains uncertain and that demand in the short-term could be down anywhere between 30% to 70%.

As part of the reshuffle, chief operating officer Greg Hart will step away from the position to focus on ways to trim the balance sheet.

The company’s structure has seen a week of positive movements as the market expresses optimism on an economic recovery.

J.C. Penney, Revlon gain

Retail chain J.C. Penney’s notes ended trading with gains, market sources said.

The 7 1/8% senior debentures due 2023 inched up ¼ point to close at 1 bid. The 7.4% senior debentures due 2037 picked up 1½ points to close at 3 bid.

The Plano, Tex.-based department store chain announced said early Thursday that it would reopen 150 of its retail locations in 27 states, bringing the total number of reopenings to 304.

On May 15, the company filed for Chapter 11 bankruptcy after reaching a restructuring agreement with creditors.

The company was forced to temporarily shutter its retail locations in March in order to comply with government mandates to slow the spread of the coronavirus.

New York-based cosmetics producer Revlon’s issues marked the day with an improvement.

The 5¾% senior notes due 2021 tacked on ¾ point to close at 66¼ bid. The 6¼% senior notes due 2024 gained ¼ point to close at 16 bid.

Intelsat diverges

Elsewhere, telecom name Intelsat’s paper diverged, traders said.

Intelsat Jackson Holdings SA’s 5½% senior paper due 2023 chalked off 3¾ points to close at 51¼ bid. The 8½% senior notes due 2024 edged up ¼ point to close at 58½ bid.

After the end of trading on Wednesday, the Luxembourg-based satellite operator announced that it had officially opted into the FCC’s accelerated C-band clearing plan.

The move strengthens the company’s position to participate in a December C-band auction, where the company stands to receive about $4.85 billion in revenue.

Earlier this month, after amassing billions in debt, the company filed for Chapter 11 bankruptcy to gain access to funding that would help it take part in the auction.

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