AMC notes eyed amid ratings downgrade; United Airlines active in transportation sector

By James McCandless

San Antonio, Dec. 16 – Entertainment and travel names continued to hold the focus of the distressed debt space at the week’s midpoint.

AMC Entertainment Holdings, Inc.’s notes varied as the company received a ratings downgrade on Wednesday.

Sector peer Cinemark Holdings, Inc.’s issues picked up steam.

Meanwhile, air carrier United Airlines Holdings, Inc.’s paper diverged after an analyst issued a double downgrade.

Air travel name American Airlines Group Inc.’s notes gained ground.

As oil futures built on recent improvements, Callon Petroleum Co.’s issues rose while Occidental Petroleum Corp.’s paper was mixed and Superior Energy Services, Inc.’s notes slipped.

In the technology space, Rackspace Technology Global, Inc.’s issues were active but unchanged after giving the final results of a tender offer.

Telecom name Frontier Communications Corp.’s paper was positive after announcing a new chief executive.

Theaters in focus

AMC’s notes varied as the company saw a ratings shift, traders said.

The 12% notes due 2026 dipped ¼ point to close at 22¾ bid. The 5 7/8% senior subordinated notes due 2026 picked up 1½ points to close at 15½ bid.

On Wednesday afternoon, the Leawood, Kan.-based movie theater operator received a ratings downgrade from S&P Global Ratings.

The agency cut the company’s rating to CC from CCC- and placed a C rating on AMC’s $100 million of second-lien notes on CreditWatch with negative implications.

S&P made the move in reaction to AMC’s recently struck deal to exchange $100 million of its existing second-lien notes for equity and provide it with $100 million of new first-lien 15%/17% payment-in-kind toggle notes.

The exchange is viewed by S&P as distressed and tantamount to a default.

The $100 million capital raise is part of the company’s efforts to boost liquidity as it warns of running out of cash by next month.

“They are running against the clock to make any more deals before the New Year,” a trader said. “The bonds will be relatively week for weeks to come.”

Plano, Tex.-based theater chain Cinemark’s issues picked up steam.

The 5 1/8% senior notes due 2022 added 1 point to close at 96 bid. The 4 7/8% senior notes due 2023 grabbed ¾ point to close at 94¾ bid.

United Airlines eyed

Meanwhile, commercial travel name United Airlines’ paper diverged in direction, market sources said.

The 5% senior notes due 2024 held level to close at 100 bid. The 4¼% senior paper due 2022 was docked ¼ point to close at 100¼ bid.

During Wednesday’s activity, the Chicago-based air carrier was given a double downgrade by an analyst at JPMorgan.

The analyst downgraded the company’s common stock to underweight from overweight.

In a note the analyst said that the recent gains that the stock has experienced “significantly diminished the implied potential upside” for the name going into 2021, already exceeding target prices for the coming year.

As the industry waits for the federal government to pass an estimated $17 billion in relief, analysts project that the space will start recovering in the second half of 2021.

Fort Worth-based American Airlines’ notes gained altitude.

The 5% senior notes due 2022 moved up ½ point to close at 89 bid. The 11¾% senior notes due 2025 inched up ¼ point to close at 114¾ bid.

Oil names mixed

As oil futures built on recent improvements, distressed energy names ended the session on uneven footing, traders said.

West Texas Intermediate crude oil futures for January delivery shifted up 20 cents to settle at $47.82 per barrel.

North Sea Brent crude oil futures for February delivery finished at $51.08 per barrel after a 32 cent pickup.

Houston-based independent oil and gas producer Callon Petroleum’s issues rose with futures.

The 6 1/8% senior notes due 2024 were boosted by 3 points to close at 57 bid. The 6 3/8% senior notes due 2026 rose 1½ points to close at 52¾ bid.

Occidental Petroleum, another Houston-based producer, saw its paper trade mixed.

The 2.9% senior notes due 2024 pushed up ¼ point to close at 96¼ bid. The 2.7% senior paper due 2022 gave up 1 point to close at 100¼ bid.

Houston-based oilfield services provider Superior Energy’s notes slipped.

The 7 1/8% senior notes due 2021 fell ¼ point to close at 31 bid. The 7¾% senior notes due 2024 lost ¼ point to close at 31¾ bid.

Rackspace active, flat

In the technology space, Rackspace’s issues were active but ultimately flat, market sources said.

The 5 3/8% senior notes due 2028, while dipping to 105 bid during the day, closed level at 105¼ bid.

After the close on Tuesday, the San Antonio-based cloud services name announced final results for its tender offer for its 8 5/8% senior notes due Nov. 15, 2024, Prospect News reported.

The company has accepted $259,147,000 principal amount of notes by the 5 p.m. ET Nov. 30 early tender deadline.

No further notes have been tendered.

Rackspace is also offering to redeem any notes not purchased in the offer at 104.313, plus accrued and unpaid interest up to but excluding the redemption date.

Frontier notes rise

Telecom name Frontier Communications’ paper was positive, traders said.

The 10½% senior paper due 2022 garnered 1¼ points to close at 51 bid. The 11% senior notes due 2025 reached up ¾ point to close at 50¾ bid.

Early on Tuesday, the Norwalk, Conn.-based wireline communications company announced Nick Jeffery as its new president and chief executive officer. He will take on the roles on March 1, 2021 for departing CEO Bernie Han.

Jeffery’s previous position was CEO of Vodaphone UK.

© 2015 Prospect News.
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