Navios, NGL, Chesapeake, distressed energy names improve; Endo, Frontier bonds soften

By Cristal Cody

Tupelo, Miss., Jan. 11 – Distressed energy bonds traded mostly better on Monday and continued gains made at the start of the year even as oil prices stalled.

Petroleum tanker transporter Navios Maritime Acquisition’s 8 1/8% first priority ship mortgage notes due 2021 (B3/B-) climbed 1¾ points to 72 bid, a source said.

NGL Energy Partners LP’s 6 1/8% notes due 2025 headed up 1 point on the day to 71½ bid.

The 11% notes due 2024 from oilfield servicer Weatherford International LLC, which emerged from bankruptcy in December 2019, gained 1 point to 82½ bid during the session.

Also, Chesapeake Energy Corp.’s bonds improved on reports of a higher value for the company, sources said.

The company’s 8% notes due 2025 climbed 1½ points to 7 bid on Monday, improved from where the issue traded at 4½ bid as December closed.

Chesapeake plans to eliminate about $7 billion of debt under its Chapter 11 bankruptcy reorganization.

Higher valuations emerged about the company’s total value since filing bankruptcy on June 28 in the ongoing trial before the U.S. Bankruptcy Court for the Southern District of Texas.

Tone softens

Market tone was softer on Monday with stocks down across the board as Democrats moved forward with plans to vote this week on impeachment of U.S. president Donald Trump over the incitement of riots at the U.S. Capitol on Wednesday.

The iShares iBoxx High Yield Corporate Bond ETF declined 47 cents, or 0.54%, to 86.90 on Monday after trending higher in the first week of the year.

On Friday, the S&P U.S. High Yield Corporate Distressed Bond index had closed 0.76% better on the day and at a total return of 3.03% for the month and year to date.

Oil prices slipped at the start of the week after prices jumped last week following Saudi Arabia’s surprise production cut for February and March.

North Sea Brent crude oil futures for March fell 32 cents to $55.67 a barrel on Monday.

West Texas intermediate crude oil for February deliveries added 1 cent on the day to settle at $52.25 a barrel.

Earnings reporting season kicked off this week with issuers including Carnival Corp. on Monday and Delta Air Lines Inc. expected on Thursday. The stream of fourth-quarter releases is set to continue into February from utility companies.

Some distressed issues were softer on the day, market sources report.

Endo Finance LLC’s 6% notes due 2028 fell ½ point to 87½ bid.

Frontier Communications Corp.’s 7 5/8% notes due 2024 gave back ¼ point during Monday’s session to trade at 53½ bid.

The notes were quoted Friday up ¾ point at 53¾ bid.

High-grade spreads eyed

Meanwhile, about $18 billion of investment-grade BBB issuers are trading “at or wider” than BB-rated spreads, including Patterson-UTI Energy Inc.’s bonds, according to a BofA Securities, Inc. research note released on Monday.

The company’s 3.95% notes due 2028 (Baa2/BB+) dropped to a 37 handle in April at the pandemic’s start and slowly have recovered to the 94 range in trading, a source said on Monday.

Patterson-UTI’s bonds are trading at an average 450 basis points spread, according to the BofA note.

Most of the high-grade issuers trading at BB levels are in the insurance, energy, basic materials and finance sectors.

The $18 billion volume is down from a peak of about $350 billion of BBB issuers that traded at BB or wider levels in March 2020, according to the report.

© 2015 Prospect News.
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