Bombardier notes lower amid deal news; Hertz better as bankruptcy financing sought

By James McCandless

San Antonio, Sept. 22 – During the Tuesday distressed debt session, the focus shifted to newsmakers in the manufacturing and travel spaces.

Bombardier, Inc.’s notes were seen heading lower after a prospective buyer of its aerostructures unit threw questions into the closing process.

Sector peer United States Steel Corp.’s issues were under water.

In the travel space, Hertz Global Holdings, Inc.’s paper was better amid reports that the company is narrowing in on bankruptcy financing.

Meanwhile, American Airlines Group, Inc.’s and United Airlines Holdings, Inc.’s notes were varied.

Despite a rise for oil futures, Antero Resources Corp.’s, Transocean Ltd.’s and Occidental Petroleum Corp.’s issues declined.

In retail, Nordstrom, Inc.’s paper spent the session improving.

Bombardier lower

Bombardier’s notes were seen heading lower as the day ended, traders said.

The 7½% senior notes due 2025 shaved off ¼ point to close at 76½ bid. The 7 7/8% senior notes due 2027 declined by ¼ point to close at 74¼ bid.

During the Tuesday session, news broke that the buyer of the Montreal-based airplane and railcar manufacturer’s aerostructures unit was casting doubt as to whether the closing conditions of the sale could be met by the deadline.

Spirit AeroSystems Holdings Inc. said in a filing with the Securities and Exchange Commission that the $500 million deal will automatically terminate if those conditions are not satisfied.

According to the company, those conditions include an absence of legal barriers, receipt of third-party consents and no major adverse changes to the business, including fuselage and wing factories.

In a note, an analyst for RBC Dominion Securities said that while Bombardier has sufficient time to meet the closing conditions, Spirit’s announcement lowered the probability of a successful close.

Recently, Bombardier sold its rail segment to French counterpart Alstom for about $4 billion.

Pittsburgh-based steelmaker U.S. Steel’s issues were similarly under water.

The 6 7/8% senior notes due 2025 dipped 1¼ points to close at 74¾ bid. The 6¼% senior notes due fell 1 point to close at 69¼ bid.

Hertz better

In the travel space, Hertz’s paper was better, market sources said.

The 6¼% senior notes due 2022 gained 1½ points to close at 47½ bid.

Late Monday, reports indicated that the Estero, Fla.-based car rental company is weighing two bankruptcy loan offers from creditors.

Both deals are in the $1 billion to $1.5 billion range in preliminary proposals from unsecured creditors and first-lien holders.

“I think it’s a little strange that they haven’t reached some kind of deal by now,” a trader said.

After filing for bankruptcy in May, Hertz attempted to raise $500 million in bankruptcy funds by selling common stock.

The plan was scrapped after Hertz said that the shares would likely be rendered worthless by the end of the process and the SEC made inquiries.

After that, the company disclosed that it was seeking debtor-in-possession financing in August.

Airlines active

Meanwhile, American Airlines’ notes varied, traders said.

The 5% senior notes due grabbed ½ point to close at 69 bid. The 11¾% senior notes due 2025 held level at 97 bid.

The Fort Worth-based airline and others in the industry are edging toward the expiration of federal payroll aid, which has kept thousands of employees from furlough.

Leaders in the sector have been pushing for Congress to pass a second round of the $25 billion that was distributed in March before those funds expire on Oct. 1.

Chicago-based sector peer United Airlines’ issues also saw mixed movements.

The 5% senior notes due 2024 chalked off 1 point to close at 88 bid. The 4¼% senior notes due 2022 added ¾ point to close at 93¼ bid.

Oil names decline

Despite a rise in oil futures, distressed energy names drifted on a downward trend, market sources said.

West Texas Intermediate crude oil futures for November delivery picked up 26 cents to settle at $39.80 per barrel.

North Sea Brent crude oil futures for November delivery finished at $41.72 per barrel after a 28 cent gain.

Denver-based independent oil and gas producer Antero Resources’ paper dropped.

The 5 1/8% senior notes due 2022 slipped 1¼ points to close at 82½ bid. The 5 5/8% senior paper due 2023 was docked 1¼ points to close at 74½ bid.

Steinhausen, Switzerland-based contract driller Transocean’s notes also ended in a weaker position.

The 7½% senior notes due 2031 gave up ¼ point to close at 15¼ bid. The 7½% senior notes due 2026 shed ½ point to close at 22½ bid.

Houston-based producer Occidental Petroleum’s issues slid down the same path.

The 2.9% senior notes due 2024 fell 2¼ points to close at 84½ bid. The 2.7% senior notes due 2022 were pushed down 1½ points to close at 93 bid.

Nordstrom notes up

Elsewhere, in retail, Nordstrom’s paper spent the session improving, traders said.

The 4 3/8% senior notes due 2030 rose 1 point to close at 82¾ bid. The 5% senior notes due 2044 improved by 1¼ points to close at 72¾ bid.

About $19 million of the 4 3/8% paper was on the tape by the close.

While no news was out on Tuesday about the Seattle-based department store chain, its credit has seen more attention in recent weeks.

Earlier in the month, S&P Global Ratings downgraded the company based on short-term challenges presented by economic weakness and long-term risks associated with changing consumer taste.

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