Distressed oil, gas bonds gain; AMC, Rite Aid paper better; American Airlines weakens

By Cristal Cody

Tupelo, Miss., Jan. 5 – Oil and gas names in the distressed debt space improved on Tuesday on the back of better oil prices.

Offshore driller Transocean Ltd.’s distressed paper (C/CCC-) was among the day’s gainers.

“The bonds were up quite a bit across the board,” a source said.

The company’s 7½% senior notes due 2026 climbed 1¾ points to 48¾ bid.

Transocean’s 6.8% notes due 2038 jumped 2¾ points over the day to 37¼ bid.

Also, Transocean’s 9.35% notes due 2041 headed out up 2¾ points at 40¼ bid.

Oil prices soared more than $2 over the day on newly announced production cuts from Saudi Arabia.

North Sea Brent crude oil futures climbed $2.51 to settle at $53.60 per barrel.

Other issuers in the space also improved on Tuesday.

Houston-based oil and gas drilling contractor Nabors Industries Ltd.’s 7½% senior notes due 2028 (Caa1/CCC-) gained 2¼ points to 69¾ bid, a source said.

Former high-grade issuer Occidental Petroleum Corp.’s 4.4% senior notes due 2046 (Ba2/BB-/BB) were up 1.87 points to 88.53 bid.

Peabody softens

Some distressed energy bonds continued to weaken on Tuesday.

Coal producer Peabody Energy Corp.’s 6% senior secured notes due 2022 (Caa1/CCC-) fell 1¾ points to 71¼ bid, a source said.

On Monday, the company’s 6 3/8% senior secured notes due 2025 (Caa1/CCC-) softened 1½ points to 54¾ bid.

Peabody Energy has an early tender deadline coming up on Friday to exchange the 6% notes.

In the Covid-19 hard-hit travel sector, American Airlines Group Inc.’s 3¾% senior notes due 2025 (Caa1/CCC/CCC) softened another 1.65 points to 74.6 bid over the day.

The notes headed out Monday down 1¼ points at 76¼ bid.

Market improves

The high-grade and high-yield markets saw robust bond issuance on Tuesday, while it was “very quiet in distressed land,” a source said. “There’s not much real volatility. The HY market was better than yesterday.”

The iShares iBoxx High Yield Corporate Bond ETF rose 3 cents, or 0.03%, to 87.15 after softening 18 cents in the prior session.

Stocks ended the session in positive territory as residents in Georgia voted Tuesday to determine whether Republicans or Democrats control the U.S. Senate. Coming up on Wednesday, the electorate votes certifying president elect-Joe Biden’s win are scheduled for Congressional confirmation.

AMC, Rite Aid increase

Elsewhere in trading, theater owner AMC Entertainment Holdings, Inc.’s bonds continued to rise on Tuesday.

AMC’s 10½% first-lien secured notes due 2026 (Caa2/CCC) improved 1¾ points to 70¾ bid, a source said.

The notes were up 7/8 point at 69 bid on Monday.

In other market action, Rite Aid Corp.’s notes traded heavily on Tuesday. The 7½% senior secured notes due 2025 (Caa1/CCC-/BB-) were quoted up ¼ point at 104 bid, a source said.

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