Frontier Communications notes eyed after new issue trades; American Airlines active

By James McCandless

San Antonio, Oct. 2 – Telecom and transportation names were the focus of Friday trading in the distressed debt market.

Frontier Communications Corp.’s notes diverged in secondary trading one day after the company sold a $1.15 billion issue of seven-year notes.

Communications infrastructure name CommScope Holding Co., Inc.’s issues fell.

In the travel space, American Airlines Group, Inc.’s paper varied as the government starts talks for a second round of payroll aid for the industry.

Sector peer United Airlines Holdings, Inc.’s notes rose.

Elsewhere, in oil and gas, Superior Energy Services’ issues saw mixed results after a subsidiary received a ratings downgrade.

As oil futures ended the week trailing, Occidental Petroleum Corp.’s and SM Energy Co.’s paper followed while Antero Resources Corp.’s notes moved on different tracks.

Movie theater operator AMC Entertainment Holdings, Inc.’s issues gained despite receiving a ratings cut.

Frontier notes diverge

Frontier Communications’ notes diverged in direction to finish off the week, traders said.

The 10½% senior notes due 2022 added ¼ point to close at 42½ bid. The 11% senior notes due 2025 shed ¼ point to close at 42½ bid.

After the close on Thursday, the Norwalk, Conn.-based wireline communications company priced a $1.15 billion issue of seven-year first-lien senior secured notes at par to yield 5 7/8%, Prospect News reported.

The company had begun shopping the new offering on Tuesday.

The proceeds from the offering are going to be used with a $500 million term loan and cash available from its proposed $625 million exit revolving facility to fund its exit from bankruptcy by paying off its pre-petition first-lien notes.

Concurrently, Frontier reduced pricing on its $500 million seven-year DIP-to-exit term loan B to Libor plus 475 basis points from Libor plus 500 bps.

Hickory, N.C.-based communications infrastructure name CommScope’s issues fell.

The 5% senior notes due 2027 declined 1½ points to close at 95 bid.

Airlines in focus

In the travel space, American Airlines’ paper varied, market sources said.

The 5% senior notes due 2022 picked up 3 points to close at 71 bid. The 11¾% senior notes due 2025 were pushed down ¾ point to close at 97 bid.

The Fort Worth-based airline’s structure was in focus after the expiration of the federal government’s payroll aid for the industry.

As the company committed to previously announced furloughs of thousands of employees, Congress was starting up talks for a second round of stimulus.

During Friday’s activity, U.S. House speaker representative Nancy Pelosi, D-Calif., said that the new round of aid was “imminent.”

She also asked for airlines to reverse the furloughs that airlines have made.

In response, a spokesperson for American Airlines said that the furloughs will be reversed on the condition of passage of the stimulus.

“Even if this gets done, the demand for air travel in the next few months is going to be low,” a trader said.

Chicago-based sector peer United Airlines’ notes rose.

The 5% senior notes due 2024 grabbed ¼ point to close at 88¼ bid. The 4¼% senior notes due 2022 improved by ¾ point to close at 93½ bid.

Superior Energy mixed

Elsewhere, in oil and gas, Superior Energy’s issues saw mixed results, traders said.

The 7 1/8% senior notes due 2021 held level to close at 30 bid. The 7¾% senior notes due 2024 chalked off 1½ bid.

Late Thursday, Moody’s Investors Service issued downgrades for the Houston-based oilfield services name’s subsidiary, SESI, LLC.

The agency cut the unit’s corporate family rating, probability of default rating, senior unsecured notes rating and speculative grade liquidity rating.

On Tuesday, the company entered into a restructuring support agreement with a group of its senior noteholders that collectively hold or control 69.2% of the company’s senior unsecured notes.

The company’s plan would deleverage 100% of the company’s long-term debt and related interest costs, provide access to additional financing and improve its capital structure.

Oil weaker

As oil futures ended the week lower, distressed energy tranches largely moved on the same course, market sources said.

West Texas Intermediate crude oil futures for November delivery were knocked down $1.67 to settle at $37.05 per barrel.

North Sea Brent crude oil futures for December delivery finished at $39.27 per barrel after a $1.66 slip.

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

The 2.9% senior notes due 2024 were docked 1½ points to close at 83½ bid. The 2.7% senior notes due 2022 lost ¾ point to close at 93¾ bid.

Denver-based producer SM Energy’s notes joined the trend.

The 6 1/8% senior notes due 2022 lost ¼ point to close at 78¼ bid.

Antero Resources, another Denver-based E&P, saw its issues move on different tracks.

The 5 5/8% senior notes due 2023 pushed up ¼ point to close at 73½ bid. The 5% senior notes due 2025 shed ½ point to close at 62½ bid.

AMC gains

Theater chain AMC’s issues gained throughout the day’s activity, traders said.

The 10½% notes due 2025 tacked on 1½ points to close at 77 bid. The 10½% notes due 2026 added 2 points to close at 74 bid.

The Leawood, Kan.-based moved theater operator was another name to receive a ratings drop late Thursday.

S&P Global Ratings lowered the company’s issuer rating and removed all of its ratings from CreditWatch with negative implications.

The outlook is negative.

The agency expects AMC’s liquidity to deteriorate over the next six months without a sharp increase in domestic theater attendance.

© 2015 Prospect News.
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