Oil, gas bonds active; Centennial Resource, NGL, Weatherford, Transocean notes gain

By Cristal Cody

Tupelo, Miss., Jan. 13 – Distressed oil and gas bonds remained active in the secondary market on Wednesday with bonds mostly better despite softer oil prices.

Centennial Resource Production, LLC’s 5 3/8% senior notes due 2026 (Caa2/CCC+) added 2¼ points to 85½ bid over the day, a source said.

NGL Energy Partners LP’s 7½% senior notes due 2023 (B3/CCC+) rose more than 2 points to 79 bid during the session.

Callon Petroleum Co.’s 6 1/8% notes due 2024 (Caa2/D) were quoted up nearly 2 points at 69 bid on Wednesday.

The company was downgraded on Dec. 2 to SD from CC by S&P Global Ratings after a distressed exchange of $217 million of new 9% second-lien notes due 2025 for $389 million of existing notes at levels below par, making the transaction a selective default, S&P said.

In other energy gains, oilfield servicer Weatherford International LLC’s 11% notes due 2024 (CCC) added ¼ point to 84¼ bid during the session after going out on Tuesday 1½ points better, a market source said.

Offshore driller Transocean Ltd.’s 7½% senior notes due 2026 (C/CCC-) traded 3 points better at 51 bid after dropping 1¼ points to 48 bid on Tuesday.

Meanwhile, Superior Energy Services Inc. subsidiary SESI, LLC’s 7¾% notes due 2024 fell ½ point on Wednesday to 32 bid, according to a market source. Super Energy filed for Chapter 11 bankruptcy in December.

Oil prices softened after Tuesday’s gains.

North Sea Brent crude oil futures for March fell 52 cents to $56.06 a barrel.

West Texas intermediate crude oil for February delivery dropped 30 cents to settle at $52.91 a barrel.

The Labor Department announced on Wednesday that its consumer price index rose a seasonally adjusted 0.4% in December after increasing 0.2% in November.

The increase was driven by an 8.4% rise in gasoline prices, which accounted for more than 60% of the overall increase, the agency said.

Meanwhile, the U.S. Energy Information Administration reported Wednesday that it expects higher wholesale U.S. natural gas prices in 2021 and 2022.

Diamond Sports improves

In other distressed trading on Wednesday, Diamond Sports Group LLC’s 5 3/8% senior secured notes due 2026 (Ba3/BB-) gained more than 2¼ points to trade at 85¼ bid, a source said.

Market tone stayed mostly positive over the day as the U.S. House of Representatives impeached president Donald Trump for inciting the riot a week ago at the U.S. Capitol.

So far in 2021, the distressed sector is showing signs of strength, sources note.

The S&P U.S. High Yield Corporate Distressed Bond index improved 0.79% on Tuesday for a month- and year-to-date total return of 4%.

On Wednesday, the iShares iBoxx High Yield Corporate Bond ETF rose 26 cents, or 0.3%, to close at $87.27.

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