Weatherford, NGL, Nabors notes gain; WeWork active on merger talk; AMC paper recovers

By Cristal Cody

Tupelo, Miss., Feb. 3 – Distressed energy bonds mostly climbed higher in secondary trading on Wednesday in tandem with oil prices.

Oil and gas company Weatherford International plc’s 11% senior notes due 2024 (B3/CCC) traded 4 1/8 points better at 92 5/8 bid, a source said.

NGL Energy Partners LP’s 7½% notes due 2026 (Caa1/CCC+) were heavily traded over the past two sessions, improving ½ point to 77¾ bid on Wednesday, according to a market source.

Oil and drilling contractor Nabors Industries Ltd.’s 5.1% senior notes due 2023 (Caa2) headed out up 2¼ points at 87¾ bid.

Nabors’ 5¾% senior notes due 2025 (Caa2) also traded 2 points better on the day at 68 bid, a source said.

Oil futures continued to gain on Wednesday.

North Sea Brent crude oil futures for April deliveries climbed $1 to settle at $58.46 a barrel.

West Texas intermediate crude oil for March deliveries rose 93 cents to settle at $55.69 a barrel.

Elsewhere in the energy space, coal producer Alliance Resource Operating Partners LP’s 7½% senior notes due 2025 (B1/B+) ticked up 2¾ points to 93 bid in strong trading volume over the day, a source said.

Coal producer Peabody Energy Corp.’s 6 3/8% senior secured notes due 2025 (Caa1/CCC-) saw little secondary volume on Wednesday after the notes traded at 59 bid in heavy supply Tuesday, a source said.

The notes are down 1½ points from where the issue traded in the same session a week ago.

Peabody Energy completed a tender offer in January to exchange its 6% secured notes due 2022 for new 10% secured notes due 2024 and 8½% secured notes due 2024.

On Wednesday, S&P Global Ratings downgraded the company’s rating to SD from CCC, citing the exchange offer as a “distressed debt exchange and tantamount to a default.”

Market tone was mixed on Wednesday but mostly stronger as focus turned to the heavy fourth-quarter corporate earnings release calendar.

The iShares iBoxx High Yield Corporate Bond ETF finished up 8 cents, or 0.09%, at $87.22.

The S&P U.S. High Yield Corporate Distressed Bond index has a month-to-date total return of 0.25% so far in February after closing Tuesday up 0.5%. The index has a year-to-date total return of 8.7%.

Chesapeake Energy mixed

Meanwhile, Chesapeake Energy Corp.’s existing bonds were mixed in strong trading following the company’s two-part note offering on Tuesday, a source said.

The 7% senior notes due 2024 climbed to 6¼ bid from 5¾ bid on Tuesday, while the company’s 5¾% senior notes due 2023 improved to 6¼ bid from 5¾ bid in the prior session.

Chesapeake Energy’s 11% senior secured second-lien notes due 2025 softened to 36½ bid over the day after the issue headed out Tuesday at 42¾ bid.

Chesapeake Energy’s Chapter 11 bankruptcy exit plan was approved in January.

On Tuesday, the Oklahoma City-based energy company priced $1 billion of senior notes in two tranches that included $500 million of 5½% five-year notes and $500 million of 5 7/8% eight-year notes.

Proceeds are set to be used for purposes that include funding distributions under the company’s bankruptcy reorganization plan and to pay costs related to its emergence from bankruptcy.

AMC recovers ground

In other distressed secondary trading, WeWork Cos. LLC’s bonds have softened this week on reports of a possible merger with a special purposes acquisition company, a market source reported.

The flexible office share company’s 7 7/8% senior notes due 2025 (CCC+/CC) saw thin trading Wednesday at 84.475 bid after heavy volume had the bonds bid at 85¼, down 2 points, on Tuesday. The bonds have softened since trading Friday at 89 bid.

Elsewhere, AMC Entertainment Holdings, Inc.’s 12% second-lien senior secured notes due 2026 (Ca/C) recovered 4¾ points to 68¼ bid in heavy trading volume on Wednesday after softening 9¾ points in the prior session, a source said.

The company’s bonds gave back some gains Tuesday after rallying over the past week on reports of additional funding raised.

AMC’s 12% second-lien senior secured notes due 2026 (Ca/C) also were up 4¼ points at 69 bid on Wednesday.

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