AMC notes decline amid shift in theater landscape; L Brands eyed after ratings action

By James McCandless

San Antonio, Dec. 4 – At the end of the week, the distressed debt market remained focused on upheaval in the entertainment space.

AMC Entertainment Holdings, Inc.’s notes weakened as the company tries to push back against a major film studio’s 2021 film release policy.

Sector peer Cinemark Holdings, Inc.’s issues varied.

Meanwhile, in the retail space, L Brands, Inc.’s paper diverged in direction after a ratings agency shifted its outlook on the name.

Department store chain Nordstrom, Inc.’s notes improved.

Air travel company American Airlines Group, Inc.’s issues trended upward despite releasing negative guidance.

Travel name United Airlines Holdings, Inc.’s paper yielded mixed results.

As oil futures were carried higher, Occidental Petroleum Corp.’s, Transocean Ltd. and Antero Resources Corp.’s notes followed.

AMC notes weaken

AMC’s notes weakened by the end of the Friday session, traders said.

The 10½% notes due 2025 gave up 3½ points to close at 74½ bid. The 6 1/8% senior subordinated notes due 2027 lost 3½ points to close at 19 bid.

During the Friday session, the Leawood, Kan.-based movie theater chain began pushing back against a major studio’s change in its 2021 film release policy.

Warner Bros. announced on Thursday that it would shift its policy to release films in theaters and on the streaming platform HBO Max simultaneously.

After one month, titles would leave the platform and remain in theaters.

In a statement released late Thursday, AMC’s chief executive officer, Adam Aron, said that the studio is sacrificing its partners to increase the profitability of the streaming platform, going on to say that “we will do all in our power to ensure that Warner does not do so at our expense.”

Also on Thursday, AMC filed a plan to raise $860 million by selling 200 million shares of common stock, again warning that without a capital raise it would run out of money by the end of the year.

Plano, Tex.-based theater operator Cinemark’s issues varied.

The 5 1/8% senior notes due 2022 rose 1 point to close at 96½ bid. The 4 7/8% senior notes due 2023 shaved off ¼ point to close at 94 bid.

L Brands little moved

Meanwhile, in the retail space, L Brands’ paper was flat to slightly lower in trading, market sources said.

The 6¾% senior notes due 2036 held level to close at 110¾ bid. The 5¼% senior notes due 2028 dipped ¼ point to close at 104½ bid.

Late in the day on Thursday, the Columbus, Ohio-based specialty retail name received an outlook change from Moody’s Investors Service.

The agency changed the outlook on the company to positive from negative and affirmed the company’s ratings.

In a note, Moody’s said that the change is in reaction to the outsized performance of its Bath and Body Works division, recent improvement in operations at the Victoria's Secret segment and the expectation that L Brands will continue its debt reduction efforts.

Seattle-based department store chain Nordstrom’s notes improved.

The 5% senior notes due 2044 grabbed ¾ point to close at 93¾ bid.

Airlines in focus

Air travel company American Airlines’ issues trended upward, traders said.

The 5% senior notes due 2022 pushed up ½ point to close at 87¾ bid. The 11¾% senior notes due 2025 garnered 1¾ points to close at 116¼ bid.

In the middle of Friday activity, the Fort Worth-based air carrier announced that it expects its fourth-quarter average daily cash burn rate to be at the higher end of the previously projected $25 million to $30 million range.

The company said that a combination of rising coronavirus cases and travel restrictions has resulted in a slowdown in net bookings growth.

Reports this week indicated that Congress has earmarked a potential $17 billion for the industry as part of the most recent round of stimulus talks.

Over the last several months, the company has furloughed thousands of employees while waiting for payroll protection aid.

Chicago-based commercial airline United Airlines’ paper yielded mixed results.

The 5% senior notes due 2024 tacked on ½ point to close at 99½ bid. The 4¼% senior notes due 2022 lost ¾ point to close at 100¼ bid.

Oil higher

As oil futures were carried higher, distressed energy names followed, market sources said.

West Texas Intermediate crude oil futures for January delivery shot up 62 cents to finish at $46.26 per barrel.

North Sea Brent crude oil futures for February delivery ended the session at $49.25 per barrel after a 54 cent boost.

On Friday, OPEC and other oil producers agreed to raise crude output by 500,000 barrels of oil per day in January.

Houston-based independent oil and gas producer Occidental Petroleum’s notes joined the positive trend.

The 2.9% senior notes due 2024 were lifted 1 point to close at 95½ bid. The 2.7% senior notes due 2022 garnered 1 point to close at 100 bid.

Steinhausen, Switzerland-based contract driller Transocean’s issues improved.

The 7½% senior notes due 2031 picked up ½ point to close at 29 bid. The 8 3/8% senior notes due 2021 added ½ point to close at 75 bid.

Denver-based producer Antero Resources’ paper spent the session improving.

The 5% senior notes due 2025 moved up ¾ point to close at 83¾ bid.

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