Distressed energy bonds soften; Transocean, Moss Creek slip; Diamond Sports lower

By Cristal Cody

Tupelo, Miss., Feb. 26 – Energy bonds in distressed secondary trading softened over Friday’s session on mixed oil prices.

“The market was very busy today,” a source said. “A lot of new issues were softer and distressed names were spotty. If they’re energy-related, they’re down.”

West Texas intermediate crude oil for April deliveries dropped $2.03 to settle at $61.50 a barrel.

North Sea Brent crude oil futures for April deliveries settled unchanged at $66.88 a barrel.

Overall market tone remained mostly weak on Friday.

The iShares iBoxx High Yield Corporate Bond ETF, which fell 81 cents on Thursday, fell another 26 cents, or 0.30%, to $86.44.

Offshore driller Transocean Inc.’s bonds traded about ¼ to ¾ points weaker over the day, a source said.

Transocean’s 11½% notes due 2027 (Caa3) were down ¾ point at 82¼ bid.

The company’s 7½% senior notes due 2026 (C/CCC-/) fell ¼ point to 66 bid.

Oil and gas drilling contractor Nabors Industries Inc.’s bonds traded about ¼ point to 2/3 point softer, according to the market source.

Nabors’ 5¾% senior notes due 2025 (Caa2/CCC-) dipped ¼ point to 79¾ bid.

Oil and gas exploration company Moss Creek Resources Holdings Inc.’s 7½% senior notes due 2026 (Caa2/B-) edged ¼ point lower during the session to 83¼ bid, a source said.

Elsewhere, London-based metals and mining company Vedanta Resources Ltd.’s 6 1/8% senior notes due 2024 (Caa1/B-) traded more than 2½ points weaker at 84¾ bid on Friday, a source said.

Diamond Sports remains weak

In other distressed secondary trading, Diamond Sports Group LLC’s bonds declined further over Friday’s session, a source said.

The bonds have traded lower over the past two sessions on reports the company is considering a distressed debt exchange or redemption.

Diamond Sports Group’s 5 3/8% senior secured notes due 2026 (Ba3/CCC+) fell 3¼ points to 71 bid on Friday.

The issue has softened 6 points over the week.

Diamond Sports Group’s 6 5/8% senior notes due 2027 (B3/CCC-) were quoted at 52 bid, 1 2/3 points weaker over the day and more than 5 points down on the week.

Parent company Sinclair Broadcast Group, Inc. reported soft 2021 guidance for Diamond Sports Group on Wednesday and said it remains interested in liability management initiatives, which could include a debt exchange or redemption.

S&P Global Ratings said in a news release on Wednesday that it would view such actions as tantamount to a default and that it views Diamond Sports’ capital structure as unsustainable.

AMC notes mixed

Meanwhile, distressed movie theater owner AMC Entertainment Holdings, Inc.’s bonds traded flat to weaker on Friday, according to a market source.

The company’s 12% second-lien senior secured notes due 2026 (Ca/C) were quoted at 77½ bid, down 2½ points from Thursday.

At the start of the year, the issue was quoted at 27 bid.

AMC’s notes have mostly rallied this year after the company raised additional funding and on this week’s announcement that New York City will reopen theaters on March 5.

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