Talen notes extend slide; Transocean up; Plains, PBF soften; Diamond Sports weakens

By Cristal Cody

Tupelo, Miss., June 29 – Talen Energy Supply LLC’s notes weakened another 1 point to 2½ points on Tuesday after the company’s paper ended the prior session down about 2 points to nearly 6 points.

The company’s 6½% senior notes due 2025 (B3/CCC+/B) dipped 1¼ points early in the day before going out down 1 point at 66 bid on more than $3 million of paper traded, according to a market source.

The notes dropped more than 5¾ points on $3.9 million of volume in the prior session.

The issue traded in the 84½ bid range at the end of May and the 82 bid area at the start of the year.

Talen’s 10½% notes due 2026 (B3/CCC+/B) saw heavier trading action over the day, the source said. The notes fell 1¾ points to 72½ bid on $8.5 million of secondary supply after sinking 5¾ points on more than $5.4 million of volume Monday.

The bonds have softened from 91 bid at the end of May and the 89 bid area in early January.

Talen’s credit default swaps also widened about 4 points Tuesday in a transition toward distressed trading, another source said.

On June 16, Moody’s Investors Service lowered The Woodlands, Tex., and Allentown, Pa.-based power company’s outlook to negative from stable.

Moody’s noted pressure on the company’s financial profile due to weaker PJM capacity auction results and weak first-quarter financial results due to low energy margins and costs associated with the Texas winter storm in February.

Transocean gains

Oil prices edged up after settling more than $1 lower on Monday.

North Sea Brent crude oil futures for August deliveries rose 8 cents to settle at $74.76 a barrel.

West Texas intermediate crude oil benchmark futures for August deliveries improved 7 cents to settle at $72.98 a barrel.

Overall market tone was positive after softening on Monday.

The iShares iBoxx High Yield Corporate Bond ETF gained 11 cents to close Tuesday at $88.03.

The S&P U.S. High Yield Corporate Distressed Bond index closed Monday down 0.31% and with month-to-date total returns of 1.55% and year-to-date total returns of 26.45%.

In other distressed energy issues, Vernier, Switzerland-based offshore driller Transocean Inc.’s 6.8% notes due 2038 (C/CCC-/) were quoted up 1¼ points at 64½ bid on $3.5 million of secondary supply, a source said Tuesday.

Houston-based natural gas and crude oil transporter Plains All American Pipeline, LP’s 6 1/8% series B fixed-to-floating rate cumulative redeemable perpetual preferred units (Ba3/BB/BB) softened more than 1 point to the 88¼ bid area in thin activity.

Also, PBF Holding Co. LLC’s 7¼% senior notes due 2025 (B3/B+/B+) declined more than 1½ points to the 77¾ bid area on $2.4 million of trading activity Tuesday, a source said.

The notes fell more than 1¾ points on $1.5 million of secondary action on Monday.

The bonds from the Calgary, Alta.-based subsidiary of Parsippany, N.J.-based petroleum refiner PBF Energy Inc. have climbed from trading at 64½ bid at the start of the year.

Diamond Sports declines

Meanwhile Tuesday, Diamond Sports Group LLC’s 5 3/8% senior secured notes due 2026 (B2/CCC+) declined 1½ points to 62¼ bid in heavy trading totaling $18 million, a source reported.

The issue is down about 12 points since the start of June.

The bonds traded at 81¼ bid at the start of the year.

Diamond Sports’ notes declined in the prior week after parent company Sinclair Broadcast Group, Inc. disclosed attempts to secure new funding for the Chesapeake, Va.-based sports broadcast group.

Sinclair reported in a June 21 filing with the Securities and Exchange Commission that it made two proposals to lenders and noteholders of Diamond Sports, including a March 22 proposal and an April 29 proposal, but has been unable to reach a definitive agreement.

The March proposal featured $600 million of new money first priority super priority debt and up to $6.34 billion of second priority super priority debt.

In the April offer, Sinclair proposed $500 million of new money financing and a roll-up of its notes into $100 million of first-lien bonds at prices between par and a 35% discount and yields from 9½% to 6.615% across three tranches.

Sinclair held its annual shareholders meeting on Monday with stockholders approving directors, an amended and restated employee stock purchase plan and an amendment to increase the number of shares authorized for issuance, according to an 8-K filing with the SEC on Tuesday.

GEO higher

Elsewhere, GEO Group Inc.’s 6% guaranteed senior notes due 2026 (B2/CCC) jumped more than 6 points on Tuesday to trade in the 84 bid area on more than $3.8 million of secondary volume, a source said.

The notes have climbed nearly 10 points from where the issue was seen on June 21 at 74¼ bid.

GEO’s bonds had softened as the U.S. Justice Department moved forward in January to cut 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.

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