Distressed energy bonds mixed; PBF softens; Talen gains; Shelf Drilling trades flat

By Cristal Cody

Tupelo, Miss., Feb. 11 – Distressed energy bonds were mixed in the secondary market over Thursday’s session as oil prices declined.

The iShares iBoxx High Yield Corporate Bond ETF closed up 4 cents, or 0.046%, to $87.64.

Oil futures softened on Thursday after strong increases in the front half of the week.

North Sea Brent crude oil futures for April deliveries fell 33 cents to settle at $61.14 a barrel.

West Texas intermediate crude oil for March deliveries dropped 44 cents to $58.24 a barrel.

Offshore driller Transocean Inc.’s bonds continued to see heavy secondary action on Thursday after trading about 1 point to 1½ points better on Wednesday, a source said.

The company’s paper was mixed over the day.

Transocean’s 7¼% senior notes due 2025 (Ca/CCC) traded up 1 point at 62 bid.

The driller’s 7½% senior notes due 2031 (C/CCC-) fell more than 1½ points to 44 1/8 bid going out.

Petroleum refiner PBF Holding Co. LLC’s 6% senior notes due 2028 (B3/B+) were quoted down 1 1/8 points to 57½ bid in secondary trading over the session.

Meanwhile, Talen Energy Supply LLC’s 6½% senior notes due 2025 (B3/CCC+/B) climbed 2½ points to 83¾ bid.

Also, Energy Transfer Operating LP’s 6 5/8% perpetual preferred units (Ba2/BB) jumped nearly 4 points to trade at 90½ bid on Thursday.

Elsewhere in the space, Shelf Drilling Holdings Ltd.’s 8¼% senior notes due 2025 (Caa3/CCC+) were not active in secondary trading over Thursday’s session after the issue was downgraded, a source said.

The notes were last seen in light trading at the 61 bid area on Wednesday after heavy trading last week pushed the notes up to 58½ bid from 55¼ bid in late January.

On Thursday, Moody’s Investors Service lowered the ratings on the 8¼% bonds to Caa3 from Caa2.

Hertz notes soften

In other distressed trading, bankrupt car rental company Hertz Corp.’s 5½% notes due 2024 fell 1 to 2 points over Thursday’s session before closing off 1 point at 67½ bid, a source said.

The notes traded down ½ point on Wednesday.

Hertz filed for Chapter 11 bankruptcy in May.

In January, Hertz received bankruptcy court approval to dispose of at least 121,510 lease vehicles in a master lease agreement in exchange for paying noteholders $756 million in nine equal payments of $84 million.

AMC edges higher

AMC Entertainment Holdings, Inc.’s 12% second-lien senior secured notes due 2026 (Ca/C) were active over the day in heavy trading, a source said.

AMC’s distressed bonds have been volatile in strong secondary volume since rallying in late January before softening in early February.

The 12% notes edged up to 61 7/8 bid from 61¾ bid on Wednesday in a second day of improvement after weakening on Monday and Tuesday.

The issue traded at 65 bid in the same session a week ago.

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