Royal Caribbean, Carnival gain as Trump signs stimulus bill; Peabody shoots up on exchange offer — Mid-Day Commentary

Bellwether cruise line and energy names ticked higher today after President Trump signed off on a USD 900bn coronavirus stimulus plan and a USD 1.4trn omnibus bill providing funds for the government through the end of the year and avoiding a federal shutdown that was set to begin tomorrow.

The stimulus package provides a USD 600 one-time check for eligible individuals, USD 300 per week in supplemental unemployment benefits through 14 March, USD 25bn in rental assistance, USD 284bn for the Paycheck Protection Program, USD 82bn for education, USD 10bn for childcare and more for clean energy and vaccine distribution. Trump signed the bill last night, a week after congress approved the plan, with the delay causing unemployment benefits for this week to lapse.

Royal Caribbean Cruises‘s USD 650m 5.25% senior unsecured notes due 2022 edged up to 100.75 with a 4.824% yield, compared to trades at 99.75 to yield 5.387% on 21 December, according to MarketAxess. The cruise line’s shares rose 3.2% to USD 72.93 and a market cap of USD 16.362bn intraday.

Carnival Corp‘s USD 4bn 11.5% senior secured notes due 2023 traded today at 115.728 to yield 3.318%, up slightly from levels at 115.25 to yield 5.646% on 23 December. The issuer’s stock advanced to USD 21.90 and a market cap of USD 24.151bn today, up 5.1% from Thursday (24 December)’s close.

Occidental Petroleum‘s USD 750m 4.625% senior unsecured notes due 2045, meanwhile, popped to change hands at 87.5 with a 5.566% yield this morning, compared to trades at 84.428 to yield 5.827% on 23 December, according to MarketAxess. The borrower’s USD 1.5bn 3.5% senior unsecured notes due 2029 traded today at 89.9 to yield 4.953%, versus 88.038 and a 5.237% yield on 21 December.

Peabody’s capital structure strengthened today after the coal miner last week announced that it entered into a transaction support agreement with 100% of its revolving lenders and letter of credit issuers and approximately 65% of its USD 459m 6% senior secured notes due 2022.

Under the agreement, debtholders will support the company’s offer to exchange the 2022 senior secured notes for new 2024 notes. Peabody’s revolver lenders have also agreed to convert the existing facility into new term loans and a letter of credit facility due December 2024. The new structurally senior debt will be issued by two unrestricted subsidiaries and secured by a pledge of 100% of the equity interests in an unrestricted subsidiary containing its Wilpinjong mining complex, per a company presentation.

The plan offers a par recovery for participating noteholders, with an additional 100bps cash premium offered to those that tender by an 8 January early deadline. The minimum participation threshold on the exchange is 95% of the 2022 notes.

The deal comes after multiple creditor classes organized with advisors and the company hired FTI Consulting as an operational advisor, as reported. Pro forma the deal, Peabody’s capital structure would comprise USD 1.52bn of funded debt and a USD 324m letter of credit facility.

Peabody’s USD 459m 6% senior secured notes due 2022 traded in size today at 74.5, up roughly 15 points from trades at 59.65 on 14 December, according to MarketAxess. The company’s USD 500m 6.375% senior secured notes due 2025 last traded in size at 44 on 22 December, up from 24.25 on 2 December.

The company’s common shares soared more than 44% higher today to USD 2.49 for a USD 243m market cap, up from USD 1.71 on 24 December.

In other news, GTT Communications‘s bonds moved up on 23 December after the company received a commitment letter on 22 December to fund a USD 275m new term loan facility. The term loan facility will be provided in two tranches – USD 100m in the initial draw and the balance on the satisfaction of certain conditions. Proceeds will help the company meet liquidity and working capital needs.

Earlier in December, GTT received several workout proposals as restructuring negotiations for the company progressed. The common theme in the various proposals from both lenders and bondholders revolved around a new money component and a forbearance plan.

As first reported by Debtwire, the borrower earlier entered into talks with a group of restricted debtholders regarding a comprehensive amendment to its credit agreement and a capital injection.

GTT is currently operating under a forbearance from creditors related to delayed financial results.

Its USD 575m 7.875% senior unsecured notes due 2024 traded at 40 on 23 December, up from trades at 36.5 on 15 December, according to MarketAxess.

The company’s stock traded as high as USD 4.3575 per share on 23 December and is trading today at USD 3.975 per share and a market cap of USD 232.2m, up 4.1% from Thursday’s close.

2020 Debtwire

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