NGL Energy, Transocean, Chesapeake Energy bonds decline; AMC notes extend rally

By Cristal Cody

Tupelo, Miss., Jan. 22 – Market tone softened on Friday with oil and drilling bonds down after the Biden administration suspended new oil and gas drilling permits on federal land for two months.

NGL Energy Partners LP’s bonds softened about 1 to 2 points on Friday but remained strong after rallying Thursday after the company announced a $2.05 billion offering of first-lien senior secured notes due 2026, a source said.

“They just opened a little bit softer and moved lower,” the source said Friday. “But they moved up quite a lot yesterday.”

NGL Energy’s 7½% senior notes due 2023 (Caa1/CCC+) traded late afternoon down 1 point at 92¾ bid.

On Thursday, the notes had climbed 11½ points to 93½ bid, up from 82 bid on Wednesday.

NGL’s 7½% senior notes due 2026 (Caa1/CCC+) declined more than 2 points to 80¼ bid on Friday.

The issue traded up to 83½ bid in the prior session from 74 bid on Wednesday.

NGL Energy is expected to price its new offering in the front half of next week.

Bonds from issuers including Nabors Industries Ltd., Murphy Oil Corp. and Occidental Petroleum Corp. were lower on the day.

“With the moratorium on land drilling, any company that has exposure to drilling is softer today,” one source said.

The secretary of the U.S. Interior Department under the Biden administration on Wednesday implemented a 60-day suspension on new oil and gas leasing and drilling permits for U.S. lands and waters.

Occidental Petroleum’s paper was down across the board. The company’s 4.1% notes due 2047 dropped 3½ points to 84 bid.

Offshore driller Transocean Inc.’s 7½% notes due 2026 fell 1 point to trade at 53 bid.

Oil futures were down on Friday.

North Sea Brent crude oil futures for March deliveries declined 69 cents to settle at $55.41 a barrel.

West Texas intermediate crude oil for March delivery fell 86 cents to $52.27 a barrel on Friday.

Market tone was mostly soft with stocks mixed.

The iShares iBoxx High Yield Corporate Bond ETF closed down 16 cents, or 0.18%, to $87.30.

The S&P U.S. High Yield Corporate Distressed Bond index finished up 0.54% on Thursday, giving month- and year-to-date total returns of 7.58%.

Chesapeake Energy mixed

Chesapeake Energy Corp.’s 7% senior notes due 2024 softened about ½ point on Friday to 4¾ bid, a source said.

The distressed paper traded on Thursday better at 5¼ bid.

Chesapeake Energy’s 11½% senior secured second-lien notes due 2025 were softer on Friday at 28½ bid to 29 1/8 bid after climbing this week to as high as 37 bid on Tuesday.

Chesapeake Energy’s plan to exit bankruptcy was approved last week with the company eliminating about $7 billion of debt under the reorganization.

The Chapter 11 bankruptcy case was filed on June 28 before the U.S. Bankruptcy Court for the Southern District of Texas.

AMC bonds stronger

AMC Entertainment Holdings, Inc.’s paper continued to see gains in the secondary market on Friday, sources said.

The company’s 12% second-lien senior secured notes due 2026 (Ca/C) traded up 3 points at 39¾ bid over the day.

AMC’s 10½% first-lien senior secured notes due 2025 (Caa2/CCC) rallied further during the session, trading at 90½ bid.

The 10½% notes have gained in strong secondary supply over the week, improving from 82½ bid on Tuesday to 88 bid on Wednesday and 89½ bid on Thursday.

AMC’s bonds have been stronger in trading since the company announced it issued $100 million of guaranteed first-lien secured notes due 2026 a week ago.

The 10½% notes were last seen ahead of the new bond offering at 82¼ bid on Jan. 14.

Community Health strong

In other distressed trading, Community Health Systems Inc.’s 6 7/8% notes due 2028 (Ca/CCC-) were down less than 1 point on Friday at 89½ bid but up more than 6 points on the week, sources said.

The notes had climbed to 90¼ bid on Thursday in heavy secondary volume.

At the start of the holiday-shortened market week, the notes rallied 3¾ points to trade at 85 5/8 bid on Tuesday as the company brought a $1.78 billion offering of junior priority secured notes due 2029 to the market.

Community Health System’s bonds were down modestly across the board on Friday in line with market tone, a source said.

CBL notes head up

CBL & Associates LP’s distressed paper was active in secondary trading after the company on Thursday filed notices that its disclosure statement hearing was adjourned to Feb. 24 and that it has extended the mediation period to Jan. 24.

CBL and 176 affiliated companies filed for Chapter 11 bankruptcy on Nov. 1 and Nov. 2 in the U.S. Bankruptcy Court for the Southern District of Texas.

The real estate investment trust’s 5.95% notes due 2026 traded Friday in heavy volume at 37 3/8 bid, up slightly from 37¼ bid on Thursday, a source said.

GEO paper active

Meanwhile, GEO Group Inc.’s paper was improved in distressed secondary trading on the week, a source said Friday.

On Wednesday, the real estate investment trust announced that the Federal Bureau of Prisons had decided to not renew the contract for the company’s Moshannon Valley Correctional Facility in Pennsylvania when the contract period expires on March 31.

The contract generated about $42 million in annual revenue for GEO, which said it expects to market the facility to other federal and state agencies.

GEO’s 6% senior notes due 2026 (B1/B+) traded at 77 7/8 bid on Friday, up from 76¾ bid in the same session last week, the source said.

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