American Airlines notes eyed amid analyst report; Revlon trades down in retail space

By James McCandless

San Antonio, July 28 – The Tuesday session in the distressed debt space saw shifting ground in the travel and retail sectors.

American Airlines Group Inc.’s notes varied in direction as another analyst weighed in on the company’s recovery prospects.

Sector peer United Airlines Holdings, Inc.’s issues also diverged.

In the retail space, Revlon, Inc.’s paper moved down as the company seeks to enact a debt exchange.

Pet supplies chain PetSmart, Inc.’s notes saw mixed results.

Meanwhile, movie theater name AMC Entertainment Holdings Inc.’s issues rose in the run-up to the company’s “theater window” announcement with a major studio.

As oil futures were pushed lower, Occidental Petroleum Corp.’s paper followed while Antero Resources Corp. and Whiting Petroleum Corp.’s notes differed.

Air and rail manufacturer Bombardier Inc.’s issues picked up steam.

Airlines active

American Airlines’ notes varied in direction at the end of the afternoon, traders said.

The 5% senior notes due 2022 gave back 2½ points to close at 57¼ bid. The 3¾% senior notes due 2025 jumped up 4¼ points to close at 49¾ bid.

The Fort Worth-based air carrier’s structure was in focus on Tuesday as analysts at Citi released a target price cut for its common stock based on its second-quarter results and weak prospects for the near-term.

In a note, analysts cited the company’s “substantial” debt load and a weak near-term booking curve.

A previous positive analyst note from Raymond James, released Monday, argued that a more balanced risk-reward scenario has emerged after a recent stock sell-off as the company tries to execute a recovery.

For the second quarter, the name posted a $7.82 per share loss and revenues of $1.62 billion.

Chicago-based sector peer United’s issues also diverged in direction.

The 5% senior notes due 2024 picked up 2 points to close at 85 bid. The 4¼% senior notes due 2022 lost 2½ points to close at 88½ bid.

Revlon declines

In the retail space, Revlon’s paper moved downward, market sources said.

The 5¾% senior notes due 2021 fell 3½ points to close at 36½ bid.

After the Monday close, reports indicated that the New York-based cosmetics producer is proposing a debt exchange for the 2021 notes.

The company wants to exchange the notes for 2024 notes with the same coupon, hoping to relieve some of the pressures that the coronavirus pandemic is having on sales.

Revlon wants creditors to take a 20- to 25-point discount from par value as part of the exchange.

“They are very over-levered,” a trader said. “At some point, they will have to restructure.”

The final deadline for the exchange is Aug. 21.

Phoenix-based pet supplies retailer PetSmart’s notes saw mixed results.

The 8 7/8% senior notes due 2025 shaved off ¾ point to close at 103¾ bid. The 5 7/8% senior notes due 2025 held level at 103 bid.

AMC rises

Meanwhile, movie theater name AMC’s issues rose, traders said.

The 5¾% senior subordinated notes due 2025 picked up 2 points to close at 26¼ bid.

The Leawood, Kan.-based theater company’s issues saw more attention in the run-up to its announcement that it has struck a multi-year deal with Universal Pictures to show Universal Pictures and Focus Pictures films for 17 days before they are placed on video on demand.

International distribution talks are ongoing.

The two parties had been in a dispute over the “theatrical window” after the pandemic forced theater locations to close and studios began releasing movies online.

In the last week, AMCreleased the final results of a four-series exchange offer and delayed theater re-openings to mid-to-late August.

Oil lower

As oil futures were pushed lower on Tuesday, distressed energy tranches moved on a similar track, market sources said.

West Texas Intermediate crude oil futures for September delivery were docked 56 cents to settle at $41.04 per barrel.

North Sea Brent crude oil futures for September delivery ended at $43.22 per barrel after a 19 cent loss.

Houston-based independent oil and gas producer Occidental Petroleum’s paper followed suit.

The 2.9% senior notes due 2024 chalked off 1 point to close at 94 bid. The 2.7% senior paper due 2022 shed ¼ point to close at 95¾ bid.

Denver-based producer Antero Resources’ notes differed in direction.

The 5 1/8% senior notes due 2022 racked up 1 point to close at 77¼ bid. The 5 5/8% senior notes due 2023 dipped ½ point to close at 70¼ bid.

Whiting Petroleum, another Denver-based E&P, saw its issues drift apart.

The 6¼% senior notes due 2023 closed level at 19 bid. The 6 5/8% senior notes due 2026 fell ¼ point to close at 18¾ bid.

Bombardier up

Air and rail name Bombardier’s paper picked up steam, traders said.

The 7 7/8% senior notes due 2027 gained ½ point to close at 76 bid. The 8¾% senior notes due 2021 improved by 1 point to close at 97½ bid.

News broke on Monday that the Montreal-based manufacturer’s prospective sale of its rail segment to Alstom is expected to receive anti-trust approval from the European Union.

The sale agreement was originally reached in February for $8.2 billion.

© 2015 Prospect News.
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