American Airlines notes eyed as stimulus talks halt; Hertz trades mixed in travel space

By James McCandless

San Antonio, Oct. 6 – With the abrupt news that stimulus negotiations have ended, the distressed debt space focused on names in the hard-hit transportation sector on Tuesday.

American Airlines Group, Inc.’s notes diverged in direction after all stimulus negotiations were abruptly halted Tuesday afternoon.

Sector peer United Airlines Holdings, Inc.’s notes also yielded mixed results.

Elsewhere in travel, Hertz Global Holdings, Inc.’s paper varied amid reports that the company is entertaining offers for its car leasing unit.

Movie theater operator AMC Entertainment Holdings, Inc.’s notes dropped after saying that it would keep most of its locations open.

In the REIT space, Uniti Group Inc.’s issues were active but unchanged as the name received a ratings downgrade.

Mall owner CBL & Associates Properties, Inc.’s paper moved on different tracks.

As oil futures strengthened, so did the notes of Occidental Petroleum Corp. and Superior Energy Services. Meanwhile, SM Energy Co.’s issues weakened.

Airline paper on the move

American Airlines’ notes diverged in direction on Tuesday, traders said.

The 5% senior notes due 2022 rose ½ point to close at 71½ bid. The 11¾% senior notes due 2025 gave up 2 points to close at 97¾ bid.

The Fort Worth-based commercial airline’s structure remained in focus, with investor sentiment softening into the afternoon after president Donald Trump announced that stimulus negotiations would halt immediately.

The president said that congressional leaders were not negotiating in good faith and that a stimulus bill would be passed after the November election.

“Everything kind of went off a cliff after that,” a trader said. “This could change tomorrow or some other time, but it adds a lot of uncertainty to the short-term.”

Since Friday, members of Congress had been negotiating over a second round of stimulus for the airline industry after the first $25 billion expired at the beginning of October.

After the expiration, the company issued thousands of furloughs to is employees, promising to reverse the action if new legislation is passed.

Chicago-based sector peer United Airlines’ issues also yielded mixed results.

The 5% senior notes due 2024 picked up ½ point to close at 88 bid. The 4¼% senior notes due 2022 trailed by 1 point to close at 93¾ bid.

Hertz notes trade mixed

Elsewhere in travel, Hertz’s paper varied, market sources said.

The 6¼% senior notes due 2022 sank 3½ points to close at 41¾ bid. The 5½% senior paper due 2024 gained ½ point to close at 44½ bid.

During the Tuesday session, reports indicated that the Estero, Fla.-based car rental company is entertaining offers from two private equity firms for its car leasing segment.

TPG and Onex Corp. are both in the running to purchase the company’s Donlen unit for about $1 billion.

Donlen performs fleet management functions for the company, earning about $100 million in 2019.

The news comes a week after Hertz announced the resignation of its chief financial officer.

Finance executive Kenny Cheung was promoted to the top role, with outgoing CFO Eric Esper staying on as chief accounting officer until November.

AMC drops

Movie theater operator AMC’s notes dropped as the session ended, traders said.

The 10½% notes due 2025 declined 1¾ points to close at 65½ bid.

Early Tuesday, the Leawood, Kan.-based theater chain announced that it would keep most of its locations open despite delays in film releases.

The company said that it plans to keep 80% of its U.S. locations operating, along with 90% of its European spots and 100% of its Middle East locations.

The decision comes despite a slate of recent postponements in movie releases from studios.

Over the weekend, industry peer Cineworld announced that it would temporarily close its 536 Regal theater locations across the United States and 128 locations in the United Kingdom.

The company received a ratings downgrade last week, with S&P Global Ratings cutting its issuer rating.

Uniti active, flat

In the property space, Uniti’s issues were active but ultimately unchanged, market sources said.

The 7 7/8% senior secured notes due 2025 closed level at 107 bid. The 8¼% senior notes due 2023 closed flat at 99½ bid.

On Tuesday afternoon, the Little Rock, Ark.-based telecom-focused real estate investment trust received a ratings upgrade from Moody’s Investors Service.

The agency lifted the company’s corporate family rating, probability of default rating and issue level ratings.

The outlook was changed to stable.

Moody’s said that the change is based on the improved financial flexibility of its primary customer, Windstream.

Chattanooga, Tenn.-based mall owner CBL’s paper moved on different tracks.

The 5¼% senior paper due 2023 chalked off 1½ points to close at 37 bid. The 4.6% senior notes due 2024 rose ½ point to close at 37¾ bid.

Oil names rise

In the energy sector, West Texas Intermediate crude oil futures for November delivery were carried up by $1.45 to settle at $40.67 per barrel.

North Sea Brent crude oil futures for December delivery finished at $42.65 per barrel after a $1.36 gain.

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

The 2.9% senior notes due 2024 added 1½ points to close at 87 bid. The 2.7% senior notes due 2022 moved up ¾ point to close at 96¼ bid.

Houston-based oilfield services provider Superior Energy’s issues joined the positive push.

The 7 1/8% senior notes due 2021 tacked on ¼ point to close at 29½ bid.

Denver-based E&P SM Energy’s paper was seen falling.

The 6¾% senior notes due 2026 shed 5¼ points to close at 42 bid. The 6 5/8% senior paper due 2027 dipped ¼ point to close at 44½ bid.

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