United Airlines notes vary as layoffs expected; Bombardier up in manufacturing space

By James McCandless

San Antonio, Aug. 27 – The Thursday session in the distressed debt market was focused on travel and manufacturing names.

United Airlines Holdings, Inc.’s notes varied in direction after the company warned of more layoffs if federal aid is not approved.

Sector peer American Airlines Group Inc.’s issues also diverged.

Manufacturing name Bombardier Inc.’s paper gained amid headlines about layoffs in its Canadian operations.

In the telecom space, Intelsat SA’s notes yielded mixed results as the bankrupt name seeks to buy a commercial aviation business.

Wireline communicator Frontier Communications Corp.’s issues moved on separate paths.

Property owner Washington Prime Group Inc.’s paper picked up steam while facing a ratings downgrade.

While oil futures were under pressure, Occidental Petroleum Corp.’s, Whiting Petroleum Corp.’s and Transocean Ltd.’s notes saw non-cohesive movements.

Airlines eyed

United Airlines’ notes varied in direction to cap the day, traders said.

The 5% senior notes due 2024 held level to close at 88 bid. The 4¼% senior notes due 2022 shaved off ¼ point to close at 91 bid.

On Thursday, the Chicago-based airline announced that without a new round of payroll aid from the federal government, 2,850 pilot jobs would be cut.

The $25 billion in payroll assistance passed by Congress in March is set to expire in October unless another bill is passed.

White House officials said that president Donald Trump would take action if Congress does not, but airline union representatives have said jobs would be lost if legislation is not passed.

Analysts have predicted continued pressure on the sector moving into 2021 as the coronavirus pandemic puts pressure on demand.

“It would be very surprising if nothing gets done,” a trader said. “There is a whole month to go.”

Fort Worth-based sector peer American Airlines’ issues also diverged.

The 5% senior notes due 2022 shaved off ¼ point to close at 63½ bid. The 11¾% senior notes due 2025 rose 1 point to close at 97 bid.

Bombardier active

Manufacturing name Bombardier’s paper gained ground, market sources said.

The 7 7/8% senior notes due 2027 tacked on ½ point to close at 73½ bid. The 7½% senior paper due 2025 garnered 1¼ points to close at 75 bid.

The gains came for the Montreal-based air and rail manufacturer amid headlines surrounding impending layoffs at a Canadian facility.

The company announced on Wednesday that more than 200 employees in its Ontario plant would be laid off over the next several months heading into 2021.

Recently, the company warned of layoffs in its European operations.

Also on Wednesday, Fitch Ratings lowered the company’s senior unsecured notes to CCC/RR4 from CCC+/RR3 and removed the notes from ratings watch negative.

Intelsat, Frontier mixed

In the telecom space, Intelsat’s notes yielded mixed results, traders said.

Intelsat Jackson Holdings SA’s 5½% senior notes due 2023 closed level at 66¾ bid. The 9¾% senior notes due 2025 were lifted ¼ point to close at 70¼ bid.

Reports indicated on Wednesday that the Luxembourg-based satellite operator is proposing to acquire aviation telecom name Gogo’s commercial aviation business.

The company is looking to spend as much as $500 million.

In May, Intelsat filed for Chapter 11 bankruptcy in part to win access to financing that would hold it over as it waits to participate in an anticipated auction of C-band spectrum in December.

Norwalk, Conn.-based wireline communicator Frontier’s issues moved on separate paths.

The 10½% senior notes due 2022 dipped ¼ point to close at 42 bid. The 11% senior notes due 2025 reached up ¼ point to close at 44¾ bid.

Washington Prime up

Meanwhile, mall owner Washington Prime’s paper picked up steam, market sources said.

The 6.45% senior paper due 2024 jumped up 1½ points to close at 53 bid.

During Thursday activity, the Columbus, Ohio-based real estate investment trust saw an improvement despite receiving a ratings downgrade from Fitch Ratings.

The agency cut the ratings for the company and its operating partnership, Washington Prime Group, LP, including the long-term issuer default ratings to CC from CCC+ and issue-level ratings.

Fitch expects the company to execute an exchange or restructure within the next 12 months as it experiences deteriorating operating performance.

Oil futures fade

While oil futures were under pressure, distressed energy tranches saw non-cohesive movements, traders said.

West Texas Intermediate crude oil futures for October delivery were docked 35 cents to settle at $43.04 per barrel.

North Sea Brent crude oil futures for October delivery ended at $45.09 per barrel after giving up 55 cents.

Houston-based independent oil and gas producer Occidental Petroleum’s notes differed.

The 2.9% senior notes due 2024 rose ½ point to close at 92 bid. The 2.7% senior notes due 2022 declined by ¾ point to close at 98¼ bid.

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

The 6¼% senior notes due 2023 closed level at 23 bid. The 6 5/8% senior notes due 2026 shot up 3 points to close at 23 bid.

Steinhausen, Switzerland-based contract driller Transocean’s paper saw varying directions.

The 6½% senior notes due 2020 traded 3 points lower to close at 85½ bid. The 7½% senior paper due 2031 grabbed ½ point to close at 20¾ bid.

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