Washington Prime bonds soften; GEO better; Talen Energy gains; PBF lower; AMC improves

By Cristal Cody

Tupelo, Miss., June 21 – Washington Prime Group, LP’s bonds traded more than 2 points weaker on Monday as the company moves ahead in its Chapter 11 bankruptcy.

The 6.45% notes due 2024 (C/D/CC) headed out Monday down more than 2¼ points at the 73 bid area on light trading supply of $1.2 million, a source said.

Washington Prime Group Inc. filed for Chapter 11 in the U.S. Bankruptcy Court for the Southern District of Texas on June 13.

The company had been in a forbearance agreement since March 16 over a missed payment on the 6.45% notes.

The Columbus, Ohio-based shopping center real estate investment trust disclosed in February that its operating partnership withheld a $23.2 million interest payment that was due Feb. 15.

The company plans to restructure its corporate-level debt, either through a full equitization of its unsecured notes or an alternative value-maximizing transaction that would repay in full in cash all of its corporate debt.

Washington Prime has secured a $100 million non-amortizing multiple draw super-priority senior secured debtor-in-possession term loan facility from the consenting creditors to support daily operations.

In the prior week, Fitch Ratings dropped the issuer’s default rating to D from RD, while also upgrading its senior notes to CC from C.

GEO notes improve

Meanwhile, GEO Group Inc.’s 6% guaranteed senior notes due 2026 (B2/CCC) were quoted up nearly 1 point at 74¼ bid on $2.5 million of secondary activity on Monday, a source said.

The issue has softened year to date as the U.S. Justice Department cuts ties with private prison operators and after S&P Global Ratings dropped the company’s debt ratings by two notches in May.

The 6% bonds traded at the 78 bid area in early January.

In January, U.S. president Joe Biden instructed the Justice Department to not renew contracts with privately operated prison operators.

GEO, a Boca Raton, Fla.-based real estate investment trust that specializes in secure and processing facilities and electronic monitoring, has borrowed all of its remaining revolving credit facility availability and is building large cash balances in a strategy that usually precedes a debt exchange, S&P said in May.

GEO has retained Lazard Financial Advisory and Skadden, Arps, Slate, Meagher & Flom LLP to assess alternatives for its capital structure.

Talen bonds gain

Elsewhere, Talen Energy Supply LLC’s bonds continued to trade up on Monday following a bump in Friday’s secondary market, a source said.

The 6½% senior notes due 2025 (B3/CCC+/B) climbed 2 1/8 points to 73 1/8 bid on $2.5 million of secondary supply over the day.

The notes remain softer than the 84½ bid range quoted at the end of May and the 82 bid area from the start of the year.

Talen’s 10½% notes due 2026 (B3/CCC+/B) improved 1 point during the session to 77½ bid on $2.5 million of trading volume, the source said.

The issue also is softer than the 91 bid posted at the end of May and the 89 bid area seen in early January.

Moody’s dropped The Woodlands, Tex., and Allentown, Pa.-based power company’s outlook to negative from stable on Wednesday.

PBF declines

Oil prices remained higher during the session after gaining on Friday.

North Sea Brent crude oil futures for August deliveries added $1.39 to settle Monday at $74.90 a barrel.

West Texas intermediate crude oil benchmark futures for July deliveries settled up $2.20 at $73.66 a barrel, and August deliveries improved $1.83 to settle at $73.12 a barrel.

In other distressed energy issues, petroleum refiner PBF Holding Co. LLC’s 7¼% senior notes due 2025 (B3/B+/B+) fell more than 2½ points to the 79¾ bid area on light volume totaling $1 million, a source said.

Overall market tone was stronger on Monday.

On Friday, the S&P U.S. High Yield Corporate Distressed Bond index ended down 0.06% and with month-to-date total returns of 1.75% and year-to-date total returns of 26.69%.

The iShares iBoxx High Yield Corporate Bond ETF closed Monday up 17 cents at $87.60.

AMC moves up

In other distressed issues, AMC Entertainment Holdings, Inc.’s 5¾% senior subordinated notes due 2025 (Ca/C) rose 2¼ points to 80¼ bid on $2 million of paper traded over the day, a source said.

The bonds have climbed from trading at 76¼ bid at the end of May and 17¾ bid at the start of the year.

AMC, a Leawood, Kan.-based movie theater owner, raised approximately $428 million in a registered offering of 43 million shares of class A common stock in May.

The company has raised about $1.83 billion in total equity so far this year, according to S&P Global Ratings.

S&P upgraded the company’s ratings on June 10 to CCC+ from CCC.

AMC reported in March that it had reopened most of its U.S.-based theaters within Covid-19 compliance guidelines.

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