Transocean, Talen Energy, Shelf Drilling gain; Gran Tierra, Global Air better on week

By Cristal Cody

Tupelo, Miss., Feb. 12 – Distressed energy bonds gained as oil prices climbed more than $1 on Friday.

Offshore driller Transocean Inc.’s 8% senior notes due 2027 (Ca/CCC) improved ¾ point to 58¾ bid by late afternoon in heavy trading, a source said.

Transocean’s 7½% notes due 2031 (C/CCC-/) rose 2 1/8 points to 46¼ bid over the day.

Talen Energy Supply LLC’s 6½% senior notes due 2025 (B3/CCC+/B) continued to gain in strong secondary trading on Friday, rising ¾ point to 84½ bid after adding 2½ points on Thursday, according to a market source.

Shelf Drilling Holdings Ltd.’s 8¼% senior notes due 2025 (Caa3/CCC+) also saw heavy trading on Friday with the notes bid at 60 bid early in the session before trading late afternoon at 59½ bid, a source said.

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

The notes were last seen trading heavily in the secondary market in the same session a week ago at 58½ bid. The issue started the month trading at 55¼ bid.

“Most of the issues were up a little bit,” a source said of energy bonds. “They’re following the price of oil.”

Oil futures climbed on Friday after softening the prior day.

North Sea Brent crude oil futures for April deliveries increased $1.29 to settle at $62.43 a barrel, up more than $3 from a week ago.

West Texas intermediate crude oil for March deliveries also settled up $1.23 to $59.47 a barrel on Friday. WTI crude oil prices are up more than $2.70 from the same session last week.

Market tone was strong over the day with major stock indices edging higher.

The iShares iBoxx High Yield Corporate Bond ETF finished 14 cents, or 0.16%, better at $87.78.

Secondary trading action was “somewhat quiet” this week, a market source said.

“Earnings season is happening,” the source noted. “There’s not many offerings.”

Elsewhere in the energy space, Gran Tierra Energy Inc.’s 7¾% senior notes due 2027 (B-/CCC) traded more than 7 points better on the week, according to a BofA Securities, Inc. global research note on Friday.

The notes were not active on Friday and were last seen trading Wednesday at 80 3/8 bid, a source said.

In the prior week, the notes traded at 72½ to 75½ bid.

In other trading, Global Aircraft Leasing Co.’s bonds softened on Friday but were stronger on the week, a source said.

The company’s 7¼% notes due 2024 (B1) fell to 92¾ bid from 93 3/8 bid on Thursday, while the issue traded in the same session a week ago at 86¾ bid.

AMC bonds improve

Distressed movie theater owner AMC Entertainment Holdings, Inc.’s bonds gained on Friday with the company’s issues remaining heavily traded since rallying in late January on additional funding secured, a source reported.

The company’s 10½ first-lien senior secured notes due 2025 (Caa2/CCC) climbed to 101 bid in heavy trading supply. The notes were last seen on Tuesday trading at par bid.

AMC’s 12% second-lien senior secured notes due 2026 (Ca/C) also improved to 62 3/8 bid over the day from 61 7/8 bid in the prior session.

Revlon notes trade

Meanwhile, distressed cosmetics manufacturer Revlon Consumer Products Corp.’s 6¼% senior notes due 2024 (C/C/) traded heavily on Friday at better than 34½ bid, a market source said.

The notes are down about ½ point from where the issue started the year at 35 bid.

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