Shelf Drilling, Transocean, Callon, Summit Midstream notes drop; Washington Prime stable

By Cristal Cody

Tupelo, Miss., March 19 – Bonds in the oil and gas distressed space remained mostly weaker on Friday as oil prices recovered some losses from the prior session.

Shelf Drilling Holdings Ltd.’s 8¼% senior notes due 2025 (Caa3/CCC+) softened more than 2 points to 74¼ bid, a market source said.

Offshore driller Transocean Ltd.’s 6.8% notes due 2038 (C/CCC-/) fell more than 3¼ points to just under 47 bid in thin volume, according to a market source.

Callon Petroleum Co.’s 6 1/8% senior notes due 2024 (Caa2/D) also declined 2¼ points to 86½ bid.

Dallas-based gas supplier Energy Transfer Operating LP’s 3.232% junior subordinated notes due 2066 (Ba1) fell more than 2 points to the 68¼ bid area, according to a market source.

The Woodlands, Tex.-based Summit Midstream Partners, LP’s 9½% series A fixed-to-floating rate cumulative redeemable perpetual preferred units (Caa3/C) also were down 2 points at 62 bid during the session, a source said.

S&P Global Ratings downgraded the company and the units on Thursday, citing Summit Midstream’s offer to exchange a portion of the 9½% series A preferreds for newly issued common units as distressed.

The exchange offer expires on April 6.

Meanwhile, Navios Maritime Acquisition Corp.’s 7 3/8% first priority ship mortgage notes due 2022 (Caa1) were more than 1½ points higher on the day at 78 bid on more than $7 million of paper traded, a source reported.

Oil prices closed higher after declining nearly $5 on Thursday.

West Texas intermediate crude oil futures for May deliveries rose $1.41 to settle at $61.42 after settling down $4.60 on Thursday.

North Sea Brent crude oil futures for May deliveries added $1.25 to settle up at $64.53 a barrel following a $4.72 decline in the prior session.

Market tone was mixed on Friday.

The iShares iBoxx High Yield Corporate Bond ETF improved 33 cents, or 0.38%, to close the day at $86.06 after declining 66 cents on Thursday.

HighPoint notes active

In other distressed secondary action, HighPoint Resources Corp.’s bonds saw heavy trading on Friday, according to a market source.

The company’s 7% senior notes due 2022 (C/D/) were quoted at 55 bid, up 2 points from where the issue traded Monday but still down from 62¼ bid in the same session a week ago.

The company announced on Sunday that it filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the District of Delaware to facilitate its pre-packaged plan of reorganization and merger with Bonanza Creek Energy, Inc.

The natural gas and oil exploration company’s plan was confirmed in a hearing on Thursday.

HighPoint announced in November that it agreed to merge with Bonanza Creek Energy in a debt-for-equity exchange transaction valued at about $376 million.

S&P Global Ratings on Tuesday downgraded the company and its senior notes to D from C.

On Monday, Moody’s Investors Service dropped HighPoint’s probability of default rating to D-PD from C-PD.

Under the restructuring plan, notes claims will be canceled in exchange for Bonanza Creek common stock and new Bonanza Creek senior notes.

The conditions to Bonanza Creek’s exchange offer for HighPoint’s 7% and 8¾% notes were not met when the company’s offer expired last week. A majority of holders of HighPoint’s notes and its stock approved the pre-packaged plan.

Washington Prime flat

Washington Prime Group, LP’s 6.45% notes due 2024 (C/D/C) were mostly unchanged in the 57 bid range on Friday, a market source said.

The notes traded in the 73½ bid area in mid-February.

S&P dropped the notes to D from C on Wednesday after Washington Prime Group, Inc. disclosed that it would default on the issue, but the company has entered a forbearance period with its lenders and noteholders that ends March 31.

Washington Prime Group, Inc. disclosed last month that the operating partnership withheld a $23.2 million interest payment on the notes that was due on Feb. 15.

The Columbus, Ohio-based shopping center real estate investment trust said it is in discussions on a potential deleveraging or restructuring of the notes, which may need to be implemented by filing for Chapter 11 bankruptcy, according to a 10-K filing with the Securities and Exchange Commission on Tuesday.

Washington Prime on Tuesday reported a fiscal 2020 loss of $11.04 per share, compared to a loss of 47 cents per share in fiscal 2019.

AMC notes higher

AMC Entertainment Holdings, Inc.’s 12% second-lien senior secured notes due 2026 (Ca/C) rose 7/8 point to 84 7/8 bid by late afternoon on $16 million of issues traded, a market source said.

The notes have softened from 86¼ bid on Monday but remain more than 55 points higher year to date.

As of Friday, the Leawood, Kan.-based distressed movie theater owner reported that 98% of its U.S. locations are now open, including more than 40 sites in California.

AMC expects to open more theaters once Covid-19 local and state approvals are in place.

Hertz edges up

Bankrupt rental company Hertz Corp.’s 5½% notes due 2024 continued to improve on Friday, going out up ¼ point at 90½ bid, according to a market source.

The notes have climbed from where the paper traded at the start of the week at 86¾ bid and at the end of February at 75½ bid.

Hertz filed a joint Chapter 11 bankruptcy plan of reorganization and reported it received a $4.2 billion buyout offer from Knighthead Capital Management, LLC and Certares Opportunities LLC earlier in March.

A hearing on the offer is scheduled for April 16 in the U.S. Bankruptcy Court for the District of Delaware.

The Estero, Fla.-based car rental operator filed for Chapter 11 bankruptcy in May 2020.

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