Talen edges up; Nine Energy, Peabody higher; PBF drops; Diamond Sports better; Endo mixed

By Cristal Cody

Tupelo, Miss., July 16 – Talen Energy Supply LLC’s bonds recovered further on Friday but remain firmly in the distressed space after plunging in June.

The company’s paper traded up about ¼ point to ¾ point during the session on $7.5 million of secondary supply, a source said.

Talen’s 10½% notes due 2026 (B3/CCC+/B) rose ½ point by the close to 66¾ bid on $5 million of trading volume.

The issue was seen earlier in the afternoon up ¾ point at 67 bid on $3 million of secondary trades, the source said.

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

“A couple of others are trading higher,” the source said of Talen’s paper. “The 10s are in distress because their secured debt is yielding 9% and this is yielding 22%. Talen was up a little bit, but it’s a distressed name.”

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

Nine Energy trades higher

Talen and Nine Energy Service, Inc. reported losses or other impacts from the winter storm that hit Texas and the central and southern United States in February.

Nine Energy’s 8¾% notes due 2023 (Caa2/D) rallied 1 point to 60 bid on $5 million of trading action Friday, a source said.

The notes have climbed from 51½ bid at the end of June and 45¼ bid at the year’s start. The issue is yielding more than 35%.

The Houston-based oilfield services company plans to release its second-quarter earnings results on Aug. 5.

Peabody improves

Peabody Energy Corp.’s 6 3/8% senior secured notes due 2025 (Caa1/D) improved more than 1 point to head out in the 78 bid area in thin trading during the session, a source said.

The bonds were up ¼ point on the week following S&P Global Ratings downgrade on Monday.

The St. Louis-based coal producer’s notes were quoted more than 4 points higher since the end of June and over 19 points better since the end of May.

The issue started the year at 54½ bid.

S&P said Monday that it views Peabody’s July 7 announcement of a tender offer to purchase up to $13.28 million of its 8½% notes due 2024 at a price equal to 73.84, as well as its letters of credit revolving facility due in 2024 at a discount, as distressed and tantamount to default.

PBF bonds decline

Energy bonds remain impacted as oil prices sank about $2 to $2.75 over the week.

“Oil was down more earlier,” a market source said. “Any industry bonds related to oil, depending on the circumstances, should be under pressure.”

North Sea Brent crude oil futures for September deliveries settled Friday 12 cents higher at $73.59.

West Texas Intermediate crude oil benchmark futures for August deliveries rose 16 cents to settle at $71.81, while September deliveries added 18 cents to settle at $71.56.

PBF Holding Co. LLC’s 6% senior notes due 2028 (B3/B+/B+) dropped 4½ points to 56 bid in late afternoon trading on $3 million of volume, according to a market source.

The notes slid 5½ points on Wednesday and recovered 1½ points on Thursday.

The issue from the Calgary, Alta.-based subsidiary of Parsippany, N.J.-based petroleum refiner PBF Energy Inc. is trading near where it was quoted at the 56¾ bid area at the start of the year.

PBF’s 7¼% senior notes due 2025 (B3/B+/B+) shed 2 points to trade at 68 bid on more than $1.7 million of volume Friday.

The notes declined 1½ points on Wednesday and sank 3 points Thursday.

The notes traded in the 64½ bid range at the beginning of 2021.

Overall market tone was soft.

The S&P U.S. High Yield Corporate Distressed Bond Index has weakened in July with month-to-date total returns of minus 1.98%.

The index fell 0.47% on Thursday with year-to-date total returns of 25.33%.

The iShares iBoxx High Yield Corporate Bond ETF closed Friday down 12 cents to $87.67.

Diamond Sports up

Meanwhile Friday, Diamond Sports Group LLC’s paper saw some relief.

The 6 5/8% senior notes due 2027 (Caa2/CCC-) rose ¾ point to 43 bid on more than $4 million of secondary volume, a source said.

The notes have softened about 5 points month to date and more than 10 points since the end of May.

Parent company Sinclair Broadcast Group, Inc. reported in a June 21 filing with the Securities and Exchange Commission attempts to secure new funding for the Chesapeake, Va.-based sports broadcast group.

Sinclair said 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.

Endo mostly soft

Looking at distressed pharmaceutical bonds, Endo Finance LLC’s paper was mixed after the company reported it is exploring all legal options following several orders by the Tennessee Supreme Court and state court of appeals regarding a default judgement related to opioids.

Endo’s 6% senior notes due 2028 (Caa2/CCC+) rose ½ point to 60 ¾ bid on $2 million of secondary volume, a source said Friday.

The paper added 1 point on $3 million of trading in the prior session.

The notes are down more than 5 points since the end of June and softer than where the issue traded at the 84 bid area at the beginning of 2021.

Parent Dublin-based pharmaceuticals maker Endo International plc announced in the release on Friday that it is exploring options following a default judgment order on liability entered by the Circuit Court for Sullivan County, Tenn., and the denial of an appeal on the order and denial of a requested stay of the trial court proceedings.

Endo’s 9½% senior secured notes due 2027 (Caa2/CCC+) fell ½ point to 97 bid on $3 million of paper traded Friday, the source said.

The notes rose 1 point on over $5 million of trading supply Thursday.

The issue has softened from 102½ bid at the end of June and the 112 bid area at the start of the year.

Endo will release its second-quarter results on Aug. 5.

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