CBL notes eyed after receiving default notice; Bombardier trades up despite ratings cut

By James McCandless

San Antonio, Aug. 26 – Newsmakers in the property and manufacturing spaces were the focus of attention in the distressed debt market on Wednesday.

CBL & Associates Properties, Inc.’s notes varied in direction after receiving notices of default from lenders.

Sector peer Washington Prime Group Inc.’s issues declined.

Meanwhile, manufacturer Bombardier Inc.’s paper improved despite receiving a ratings downgrade.

Oil and gas producer Occidental Petroleum Corp.’s notes diverged after the company gave early results for its tender offers.

On a mixed day for oil futures, Whiting Petroleum Corp.’s and Antero Resources Corp.’s issues moved on different tracks while Valaris plc’s paper was pushed down.

In the travel space, American Airlines Group Inc.’s notes rose while United Airlines Holdings, Inc.’s issues slipped.

REITs eyed

CBL’s notes varied in direction as the afternoon ended, traders said.

The 5¼% senior notes due 2023 garnered 1¾ points to close at 39¾ bid. The 4.6% senior notes due 2024 fell 1 point to close at 38½ bid.

Late Tuesday, the Chattanooga, Tenn.-based real estate investment trust’s operating partnership CBL & Associates LP sent a letter to holders of limited partnership interests regarding the potential impact of its proposed restructuring, Prospect News reported.

The company received notices of default and reservation of rights letters from credit agreement agent Wells Fargo Bank as a result of the partnership’s failure to comply with restrictive covenants and the failure to make interest payments on its notes before grace periods expired.

The administrative agent declared $1.123 billion of the loans with interest due immediately, which the company says it will seek an immediate stay against.

“The lenders are trying to squeeze more value out any way they can,” a trader said.

Last week, CBL entered into a restructuring support agreement with its creditors to exchange unsecured notes for new senior secured notes, $50 million in cash and 90% of new common equity to unsecured holders.

Columbus, Ohio-based mall owner Washington Prime’s issues declined.

The 6.45% senior notes due 2024 shed ½ point to close at 51½ bid.

Bombardier improves

Meanwhile, manufacturing name Bombardier’s paper improved, market sources said.

The 7 7/8% senior notes due 2027 rose ½ point to close at 73 bid. The 7½% senior paper due 2025 added ¾ point to close at 73¾ bid.

After the Tuesday close, the Montreal-based air and rail manufacturer received a ratings downgrade from Fitch Ratings.

The agency lowered the company’s senior unsecured notes to CCC/RR4 from CCC+/RR3 and removed the notes from ratings watch negative.

Fitch said that the cut is due to the company’s closing of its three-year secured term loan of up to $1 billion.

In the last week, Bombardier has seen negative headlines surrounding potential layoffs in its Canadian and European operations as the coronavirus pandemic reduces sales.

Occidental diverges

Oil and gas giant Occidental Petroleum’s notes were seen diverging, traders said.

The 2.9% senior notes due 2024 chalked off ¼ point to close at 91½ bid. The 2.7% senior notes due 2022 tacked on 1½ points to close at 99 bid.

On Tuesday, the Houston-based independent oil and gas producer Occidental Petroleum announced the early tender results for its 2021 notes, the notes listed at the top three priority levels in an eight-series offer for up to $3 billion.

In all, $138,555,000 of the $305,294,000 of 4.1% senior notes due 2021, $1,099,276,000 of the $1,449,371,000 2.6% senior notes due 2021 and $122,523,000 of the $500 million floating-rate notes due August 2021 have been tendered for exchange so far.

Recently, the company amended the tender offer to change priority orders and extended some deadlines.

Last week, the company sold off land grant assets in Wyoming, Colorado and Utah to Orion Mine Finance for $1.33 billion.

Oil mixed

On a mixed day for oil futures, distressed energy names also moved on different paths, market sources said.

West Texas Intermediate crude oil futures for October delivery gained 4 cents to settle at $43.39 per barrel.

North Sea Brent crude oil futures for October delivery wrapped the session at $45.64 per barrel after a 22 cent shave.

Denver-based producer Whiting Petroleum’s issues drifted apart.

The 6¼% senior notes due 2023 were pushed up ¾ point to close at 23 bid. The 6 5/8% senior notes due 2026 gave up 1½ points to close at 20 bid.

Antero Resources, another Denver-based E&P, saw its paper split.

The 5 1/8% senior notes due 2022 shot up 1¼ points to close at 86¼ bid. The 5% senior paper due 2025 lost 1¼ points to close at 68¾ bid.

London-based contract driller Valaris’ notes were pushed down.

The 7¾% senior notes due 2026 declined by ½ point to close at 7 bid.

Airlines active

In the travel space, American Airlines’ issues were on the rise, traders said.

The 11¾% senior notes due 2025 were lifted 1¼ points to close at 96 bid. The 5% senior notes due 2022 added 1¾ points to close at 63¾ bid.

This week, the Fort Worth-based air carrier announced that it would lay off or furlough up to 40,000 workers if a second round of federal payroll aid is not passed by October.

Of the total, 19,000 of those workers would be involuntary layoffs.

While a second round of aid for the airlines has been proposed recently in the U.S. Senate, negotiations have stalled.

Chicago-based United Airlines’ paper slipped.

The 5% senior notes due 2024 gave back 1 point to close at 88 bid. The 4¼% senior notes due 2022 fell 1¼ points to close at 91¼ bid.

© 2015 Prospect News.
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