Weather hit-energy suppliers mixed; Shelf Drilling edges up; Diamond Sports, Revlon gain

By Cristal Cody

Tupelo, Miss., March 12 – Energy issuers headed out mixed in distressed secondary trading on Friday as some companies grapple with major costs from the February winter storm that hit Texas and the central United States.

Talen Energy Supply LLC’s bonds “were all over the place” with not much trading on Friday, a market source said.

The bonds were quoted flat to about 1 point higher on the day.

Talen’s 6½% senior notes due 2025 (B3/CCC+/B) traded nearly 1 point better at 83.20 on secondary supply of more than $10 million after softening 1 point in the prior session, the source said.

The Allentown, Pa.-based power company held a conference call on Thursday to discuss its fourth-quarter and year-end earnings results and the impact from the February winter storm.

San Antonio electric utility CPS Energy announced Friday that it filed suit against the Electric Reliability Council of Texas for charging excessive prices during the storm.

The storm caused Genie Energy Ltd. and others “significant losses” after the spot energy prices soared from a usual $50 per megawatt hour to $9,000 per megawatt hour, Genie executives reported in its fourth-quarter and fiscal 2020 earnings conference call on Thursday.

Genie Energy estimates $12.8 million of costs from the storm so far.

Houston-based oilfield services company Nine Energy Service, Inc.’s 8¾% notes due 2023 (Caa2/D) fell another 1¼ points on Friday to 50 bid after softening 1¼ points in Thursday’s session, according to a market source.

The company reported earlier in the week the February winter storm caused major shutdowns within all its service lines in Texas, and it expects to generate a net loss and negative adjusted EBITDA for the first quarter.

Nine Energy has been on the decline “for a long time” but has climbed in secondary trading in March after trading as low as 18 in April 2020, the source said.

The notes traded around the 72 bid range pre-Covid-19.

Meanwhile, Algonquin Power & Utilities Corp. reported March 4 that the financial impact from the Texas winter storm on its 2021 consolidated operating income is estimated at $45 million to $55 million.

The company’s 6.2% 30-year fixed-to-floating rate subordinated notes due 2079 (BB+/BB+) closed up 6 cents, or 0.21%, at 27.67 on Friday. The notes traded ahead of the February storm in the 28 range.

Transocean mostly better

Overall, the financial markets were mixed on Friday with Treasury yields soaring following president Joe Biden signing a $1.9 trillion Covid-19 stimulus bill into law on Thursday.

The 10-year Treasury yield was up 10 basis points at 1.63%.

The market was a “little bit soft” on Friday, a source said.

The iShares iBoxx High Yield Corporate Bond ETF closed down 24 cents, or 0.28%, at $86.46.

Oil futures softened over the day.

West Texas intermediate crude oil for May deliveries declined 41 cents to settle at $65.61 a barrel.

North Sea Brent crude oil futures for May deliveries also fell 41 cents to settle the day at $69.22.

Shelf Drilling Holdings Ltd.’s 8¼% senior notes due 2025 (Caa3/CCC+) traded ¼ point higher at 77¾ bid following the company’s new $310 million secured note offering on Friday, a source said.

The notes added 2¾ points in trading on Thursday.

Elsewhere in the space, Transocean Inc.’s bonds were flat to about 1 point better after climbing 3 to 4 points on Thursday, according to a market source.

The offshore driller’s 7½% senior notes due 2025 (Ca/CCC-) rose 1 point to 70¼ bid.

Transocean Ltd.’s 6.8% senior notes due 2038 (Ca/CCC-) added 1 point to trade at 51½ bid after adding 3¼ points in the prior session.

Diamond Sports improves

In other distressed secondary trading, Diamond Sports Group LLC’s notes continued to recover on Friday following a downgrade by Moody’s Investors Service at the week’s start, a source said.

“They have been under a lot of pressure,” the source noted. “The bonds have been moving up today.”

Diamond Sports Group’s 6 5/8% senior notes due 2027 (B3/CCC-) rose 1½ points to 56½ bid on more than $15 million of trading volume, the source said.

Parent company Sinclair Broadcast Group, Inc. reported in February soft guidance for the sports broadcast group and an interest in liability management initiatives that could include a debt exchange or redemption.

On Monday, Moody’s cited a negative outlook for the issuer over uncertainty surrounding renewing carriage contracts with DISH, Hulu and YouTube.

Revlon trades up

In other distressed secondary trading on Friday, cosmetics manufacturer Revlon Consumer Products Corp.’s 6¼% senior notes due 2024 (C/C/) climbed 1¼ points to 32 bid on more than $5.5 million of secondary volume, a source said.

The notes have softened 2½ points since mid-February.

Revlon reported better-than-expected fourth-quarter earnings results on Thursday.

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