United notes eyed as revenue forecast cut; GTT better after asset sale news

By James McCandless

San Antonio, Sept. 9 – As the week reached the midpoint, the distressed debt space put the focus on tranches in the travel and telecom sectors.

United Airlines Holdings, Inc.’s notes varied in direction after the company released a larger loss in expected third-quarter revenue.

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

In the telecom space, GTT Communications, Inc.’s paper rose a day after reports indicated that it was in advanced talks to sell about $2 billion in assets.

While oil futures came off of fresh lows, Occidental Petroleum Corp.’s notes followed while Antero Resources Corp.’s issues ended mixed and Transocean Ltd.’s paper slipped.

Theater name AMC Entertainment Holdings, Inc.’s notes moved on different paths as its locations open back up.

Meanwhile, in retail, Nordstrom, Inc.’s issues pushed upward while Revlon, Inc.’s paper drifted apart.

United, AA vary

United Airlines’ notes varied in direction through the Wednesday session, traders said.

The 5% senior notes due 2024 closed level at 91 bid. The 4¼% senior notes due 2022 added 2¾ points to close at 95½ bid.

On Wednesday morning, the Chicago-based air traveler announced that it expects larger-than-expected drops in revenues and capacity in the third quarter.

The company is expecting an 85% drop in passenger revenue, slightly higher than the 83% year-over-year dip that was originally expected.

Also, the name is forecasting a 70% year-over-year reduction in passenger capacity, a 5% bump from the prior forecast.

Demand for air travel remains muted amid the coronavirus pandemic.

“The airlines are going to be weak for months, even if they get the federal aid again,” a trader said.

Also during the day’s activity, news broke that a tentative deal was reached between United and its pilots’ union to avoid furloughs.

The company has warned that thousands of workers are at risk of being furloughed if the federal government does not pass a new round of payroll aid.

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

The 5% senior notes due 2022 shaved off ¼ point to close at 66 bid. The 11¾% senior notes due 2025 held level to close at 97½ bid.

GTT rises

In the telecom space, GTT’s paper was rising, market sources said.

The 7 7/8% senior paper due 2024 tacked on 1 point to close at 51¼ bid.

The McLean, Va.-based cloud networking services name’s structure remained active a day after reports indicated that it was nearing a deal with a group of buyers to sell its European fiber assets.

Negotiations are ongoing between the company and Macquarie Group Ltd., 3i Group Plc and AustralianSuper to sell the assets for more than $2 billion.

The name has seen negative pressure in the last month or so since delaying the release of its second-quarter earnings report.

GTT said that it found issues in recording and reporting telecommunications costs and internal controls.

Oil up

While oil futures came off of fresh lows, distressed energy names saw differing movements, traders said.

West Texas Intermediate crude oil futures for October delivery popped up $1.29 to settle at $38.05 per barrel.

North Sea Brent crude oil futures for November delivery ended at $40.79 per barrel after a $1.01 bump.

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

The 2.9% senior notes due 2024 shifted up ¼ point to close at 89½ bid. The 2.7% senior notes due 2022 garnered ¼ point to close at 97 bid.

Denver-based producer Antero Resources’ issues ended on mixed ground.

The 5 5/8% senior notes due 2023 closed level at 78 bid. The 5% senior notes due 2025 picked up ¼ point to close at 66¾ bid.

Steinhausen, Switzerland-based contract driller Transocean’s paper slipped.

The 7½% senior paper due 2031 chalked off 1 point to close at 17 bid.

AMC active

Theater name AMC’s notes moved on different paths, market sources said.

The 12% notes due 2026 rose 1 point to close at 43 bid. The 10½% notes due 2026 shaved off ½ point to close at 88 bid.

This week, negative headlines have swirled around the Leawood, Kan.-based movie theater chain after disappointing long weekend box office results were released.

The highly anticipated film Tenet grossed just $20 million, sparking concerns about the industry in the short-term.

The company reopened 70% of its locations last week after extended closures amid the pandemic.

Nordstrom better, Revlon drifts

Meanwhile, in retail, Nordstrom’s issues pushed upward, traders said.

The 5% senior notes due 2044 gained 1½ points to close at 70 bid. The 4 3/8% senior notes due 2030 picked up ½ point to close at 82 bid.

Recently, the Seattle-based department store chain has come off of drops since receiving a ratings downgrade last week.

S&P Global Ratings cut the company’s the senior unsecured notes to BB+ from BBB- and assigned a 4 recovery rating.

New York-based cosmetics producer Revlon’s paper drifted apart.

The 5¾% senior paper due 2021 closed level at 32 bid. The 6¼% senior paper due 2024 jumped up 5 points to close at 14½ bid.

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