Nine Energy, EnQuest, Sunnova stuck in distressed area despite high bond prices

By Cristal Cody

Tupelo, Miss., Feb. 2 – Despite trading with handles in the high 80s and 90s so far in 2024, some junk energy names remain firmly in the distressed space on bond yields of nearly 20% and spreads of more than 1,000 basis points – the usual barometer, sources reported.

Nine Energy Service Inc.’s 13% senior secured notes due 2028 (Caa2/CCC+) traded about 1 point higher at 87 bid on Friday in odd lots, a source said.

“It’s rated triple C and yielding 18%,” a trader said. “This is still considered distressed. The spread is over 1,400 bps.”

BofA Securities reported that Nine Energy is on its list of junk issuers trading at or near distressed levels but are not on its current default list.

EnQuest plc’s bonds were yielding around 11% to 13%, “so some of the distress is arguable,” a source said.

EnQuest’s 11 5/8% senior notes due 2027 (/B+) were quiet on Friday but traded on Thursday at 95 bid, a spread of 906 bps and a 13% yield.

Among other energy names considered distressed by industry insiders is Sunnova Energy Corp.

Sunnova Energy’s 5 7/8% senior notes due 2026 (B1) were mostly quiet on Friday on an 82 bid handle and traded on Thursday at the 82½ to 83¾ range with a yield of about 14%, sources said.

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