Transocean notes better amid contract news; American Airlines eyed in travel space

By James McCandless

San Antonio, Nov. 18 – The distressed debt market saw energy and travel names take the day’s attention.

Transocean Ltd.’s notes ended in a better position amid the company’s news of two contract extensions.

While oil futures ended with modest gains, Occidental Petroleum Corp.’s and Antero Resources Corp.’s issues varied as Gulfport Energy Corp.’s paper was active but flat.

In the travel space, American Airlines Group Inc.’s notes diverged after headlines about the Boeing 737 Max.

Sector peer United Airlines Holdings, Inc.’s issues were also mixed.

Meanwhile, retailer Macy’s, Inc.’s paper moved higher in anticipation of the company’s earnings release.

Drug store chain Rite Aid Corp.’s notes were mixed.

Housewares marketer Tupperware Brands Corp.’s issues spent the day trailing.

Transocean improves

Transocean’s notes ended the day in a better position, traders said.

The 5 7/8% senior secured notes due 2024 moved up 3¾ points to close at 70¼ bid. The 11½% senior notes due 2027 rose 2½ points to close at 42½ bid.

On Wednesday, the Steinhausen, Switzerland-based contract driller announced that it had received two contract extensions to add to its backlog.

Brazilian oil name Petrobras extended the contracts for two of the company’s drillships, exercising a 680-day fixed price option for the Deepwater Corcovado and an 815-day fixed price option for the Deepwater Mykonos.

The extensions represent a $297 million addition to its backlog.

Earlier in the month, Transocean reported a loss of 11 cents per share and revenues of $773 million for the third quarter.

Oil names vary

While oil futures ended the session with modest gains, distressed energy names varied, market sources said.

West Texas Intermediate crude oil futures for January delivery tacked on 36 cents to settle at $42.01 per barrel.

North Sea Brent crude oil futures capped the day at $44.34 per barrel after a 59 cent upward shift.

Houston-based independent oil and gas producer Occidental Petroleum’s issues saw varying movements.

The 2.9% senior notes due 2024 added ¼ point to close at 91¾ bid. The 2.7% senior notes due 2022 held level to close at 97¼ bid.

Denver-based producer Antero Resources’ paper took opposite paths.

The 5 1/8% senior notes due 2022 dipped ¼ point to close at 95 bid. The 5 5/8% senior notes due 2023 were lifted ¾ point to close at 90¼ bid.

Oklahoma City-based E&P company Gulfport Energy’s notes were active but ultimately flat.

The 6 5/8% senior notes due 2023 closed level at 56½ bid.

Airlines eyed

In the travel space, American Airlines’ issues diverged, traders said.

The 5% senior notes due 2022 grabbed 1¼ points to close at 78½ bid. The 11¾% senior notes due 2025 fell 1 point to close at 107 bid.

On Wednesday morning, news broke that the Federal Aviation Administration had cleared the troubled Boeing 737 Max line of airplanes to return to the air after months of being grounded.

In reaction to the news, Fort Worth-based air carrier American Airlines, which owns about 24 of the airplanes, announced that it would fly the model starting in December.

The company said that it would start non-commercial flights in early December before opening up to passenger flights later on.

From Dec. 29 to Jan. 4, the airline will operate two flights per day.

American Airlines and others in the aviation industry have seen negative pressure since the onset of the coronavirus pandemic, which has largely restricted travel.

As the industry waits for the federal government to pass another round of payroll aid, thousands of furloughs have taken effect.

Chicago-based sector peer United Airlines’ paper was also mixed.

The 5% senior notes due 2024 lopped off 1¼ points to close at 96¼ bid. The 4¼% senior notes due 2022 closed level at 98½ bid.

Macy’s trades higher

Meanwhile, retailer Macy’s notes moved higher, market sources said.

The 4.3% senior notes due 2043 rose 1¼ points to close at 58¼ bid. The 4½% senior notes due 2034 gained 2½ points to close at 60 bid.

The New York-based department store chain’s structure was in focus in anticipation of its third-quarter earnings report.

In its report expected on Thursday morning, analysts expect the company to report a loss of 82 cents per share and revenues of $3.86 billion.

The company’s previous earnings report, released in September, showed a loss of 81 cents per share and revenues of $3.56 billion.

Macy’s has been buoyed by online sales as the coronavirus hampers in-store demand.

“I think it’s going to be a loss, but I think there will be more promising online numbers,” a trader said.

Camp Hill, Pa.-based drug store company Rite Aid’s issues were pulled apart.

The 7.7% senior debentures due 2027 improved by 1¼ points to close at 81½ bid. The 8% notes due 2026 moved down 1 point to close at 100½ bid.

Tupperware trails

Housewares name Tupperware’s paper spent the day trailing, traders said.

The 4¾% senior notes due 2021 dipped ¼ point to close at 100¾ bid.

On Tuesday, the Orlando, Fla.-based housewares marketer got a ratings upgrade from Moody’s Investors Service.

The company’s corporate family rating, probability of default rating and senior unsecured notes ratings were cut.

Other ratings were put on review for upgrade.

The agency made the changes based on the company’s enhanced operating performance and the increased chances that it would refinance its 2021 note maturity.

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