American Airlines notes higher after loan news; Cleveland-Cliffs better in steel space

By James McCandless

San Antonio, Sept. 28 – As the new week in the distressed market started, airlines and manufacturers saw much of the attention.

American Airlines Group, Inc.’s notes pushed higher after the company secured billions more in a loan from the federal government.

Sector peer United Airlines Holdings, Inc.’s issues varied.

Meanwhile, steel name Cleveland-Cliffs, Inc.’s paper ended in a better position after announcing the acquisition of a competitor.

Steelmaker United States Steel Corp.’s notes diverged.

In the telecom space, Frontier Communications Corp.’s issues saw mixed results as the company preps to sell $1.15 billion of secured notes.

Satellite operator Intelsat SA’s paper improved.

A positive day for oil futures led to gains for Occidental Petroleum Corp.’s and Transocean Ltd.’s notes while Antero Resources Corp.’s issues moved on separate tracks.

AA flies, United varies

American Airlines’ notes pushed higher to kick off the week, traders said.

The 5% senior notes due 2022 improved by 2½ points to close at 69 bid. The 11¾% senior notes due 2025 tacked on 2 points to close at 97 bid.

As the market closed Friday, news broke that the Fort Worth-based air carrier had secured a $5.5 billion loan from the federal government.

The funds are part of the original $25 billion package that was allocated to the industry in March as the onset of the coronavirus pandemic and restrictions on travel.

Since then, some airlines have indicated that they do not intend to use their share, freeing up some funds to be redistributed.

The company could receive an additional $2 billion in October as funds are adjusted.

Concurrently, the name announced that it had closed on a $1.2 billion loan from Goldman Sachs & Co. LLC.

American Airlines and others in the travel space have warned that without a new round of payroll aid, thousands of employees are at risk of furlough.

Chicago-based sector peer United Airlines’ issues varied.

The 5% senior notes due 2024 reached up 2½ points to close at 89 bid. The 4¼% senior notes due 2022 held level to close at 92 bid.

Cleveland-Cliffs better

Meanwhile, steel name Cleveland-Cliffs’ paper ended in a better position, market sources said.

The 5 5/8% senior paper due 2027 rose 2¼ points to close at 92½ bid. The 6¼% notes due 2040 shot up 3¼ points to close at 77 bid.

Early Monday, the Cleveland-based iron mining company announced that it has agreed to acquire peer ArcelorMittal for about $1.4 billion in a cash and stock deal.

$505 million will be paid for with cash while the remaining will be paid for with equity.

Also included in the deal is $2 billion in liabilities, bringing the size of the deal to $3.4 billion.

“I think what people liked in particular is that Cleveland-Cliffs isn’t taking on any debt for this,” a trader said.

This is the second acquisition the name has made this year after moving to purchase AK Steel in March.

Steelmaker U.S. Steel’s notes were pushed in different directions.

The 6.65% senior notes due 2037 fell 2½ points to close at 61 bid. The 6 7/8% senior notes due 2025 picked up ¾ point to close at 73¼ bid.

Frontier mixed, Intelsat up

In the telecom space, Frontier Communications’ issues had mixed results as the day concluded, traders said.

The 10½% senior notes due 2022 added ¾ point to close at 41¾ bid. The 11% senior notes due 2025 shaved off ½ point to close at 41½ bid.

The Norwalk, Conn.-based wireline communications name set an investor conference call for noon ET on Tuesday to offer a $1.15 billion offering of seven-year first-lien senior secured notes, Prospect News reported.

The company will use the funds to exit the bankruptcy process.

Also, the name has proposed $1.65 billion of first-lien debtor-in-possession financing and a $500 million superpriority DIP-to-exit term loan B.

In April, Frontier filed for Chapter 11 bankruptcy to restructure its debt obligations.

Luxembourg-based satellite operator Intelsat’s paper improved.

Intelsat Jackson Holdings SA’s 5½% senior paper due 2023 garnered 1½ points to close at 63 bid. The 8% paper due 2024 inched up ¼ point to close at 101¾ bid.

Oil trends better

A positive day for oil futures largely sparked gains for distressed energy names, market sources said.

West Texas Intermediate crude oil futures for November delivery moved up 35 cents to settle at $40.60 per barrel.

North Sea Brent crude oil futures for December delivery ended the day at $42.43 per barrel after a 51-cent rise.

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

The 2.9% senior notes due 2024 improved by 1 point to close at 84¼ bid. The 2.7% senior notes due 2022 gained ¾ point to close at 92¾ bid.

Steinhausen, Switzerland-based contract driller Transocean’s issues followed the trend.

The 8% senior notes due 2027 grabbed ¼ point to close at 28¼ bid. The 6½% senior notes due 2020 rose ¼ point to close at 93¾ bid.

Denver-based E&P Antero Resources’ paper moved on separate tracks.

The 5 5/8% senior paper due 2023 pushed up ½ point to close at 73¾ bid. The 5% senior paper due 2025 chalked off ¾ point to close at 63¾ bid.

© 2015 Prospect News.
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