Energy bonds drop; PBF, NGL slide; Talen improves; Diamond Sports up; Washington Prime flat

By Cristal Cody

Tupelo, Miss., Aug. 2 – Lower-rated distressed energy bonds softened Monday on flat to weaker oil prices.

West Texas Intermediate crude oil benchmark futures for September deliveries sank $2.69.

“It was a pretty big move back to 70 now for oil,” a market source said. “The lower-rated names cut back significantly.”

PBF Holding Co. LLC’s 9¼% senior secured notes due 2025 (Ba3/BB/BB) lost over 3 points during the session.

NGL Energy Partners LP’s 7½% senior notes due 2026 (Caa1/CCC+) slipped more than 2¼ points.

Transocean Inc.’s bonds were mixed in lighter trading.

“In general, triple-C energy bonds were down anywhere from ½ point to 1 point,” a source said. “There hasn’t been a great deal of trading. It’s a slower August Monday.”

Talen Energy Supply LLC’s bonds saw strong improvements over the day but remained weaker month to date.

Elsewhere, Diamond Sports Group LLC’s notes were flat to better after the 6 5/8% senior notes due 2027 (Caa2/CCC-) fell to the high 30s last week.

Washington Prime Group, LP’s 6.45% notes due 2024 (C/D/CC) were mostly unchanged.

The high-yield and distressed spaces were “pretty flattish” in the first session of August, according to a market source.

PBF trades down

PBF Holding’s 9¼% senior secured notes due 2025 (Ba3/BB/BB) sank 3 3/8 points to 89 3/8 bid on $19.5 million of trading supply Monday, a source said.

“Last week, the bonds were up at 91, 94, and it’s come back in,” another source said.

The Parsippany, N.J.-based petroleum refiner’s notes traded at the 92 bid area the same day a week ago.

NGL paper slips

NGL Energy Partners’ 7½% senior notes due 2026 (Caa1/CCC+) slipped more than 2¼ points to the 82 bid area on $3 million of trading action during the session, a source said.

The Tulsa-based diversified midstream services provider’s notes have softened more than 7 points since May.

Transocean edges up

Transocean’s 7½% notes due 2026 (Ca/CCC+) were not active Monday, while the company’s 8% debentures due 2027 (C/CCC) traded up about ¾ point from Friday to 74½ bid in strong supply, a market source said.

The Vernier, Switzerland-based offshore driller’s 8% bonds were down 11¾ points since the beginning of July.

Distressed index softens

Oil prices were flat to weaker Monday.

North Sea Brent crude oil futures for September deliveries settled unchanged for a second consecutive session at $76.05 a barrel after gaining $1.31 on Thursday.

West Texas Intermediate crude oil benchmark futures for September deliveries sank $2.69 to settle at $71.26 a barrel. The benchmark prices settled Friday up 33 cents after gaining $1.23 on Thursday.

Measured market volatility increased further on Monday with focus on a heavy round of second-quarter earnings reports due this week.

The Chicago Board Options Exchange’s CBOE Volatility Index rose 6.69% to 19.46 after increasing 3.05% on Friday.

The iShares iBoxx High Yield Corporate Bond ETF closed down 0.25% at $87.34.

Distressed returns ended Friday weaker.

The S&P U.S. High Yield Corporate Distressed Bond Index finished Friday at minus 0.14% after ending the prior session up 0.72%.

Month-to-date total returns posted Friday at minus 3.11%, down from minus 2.97% on Thursday.

Distressed year-to-date total returns declined to 23.9% on Friday from 24.08% in the prior session.

Talen notes better

In other distressed energy issues traded Monday, Talen’s 6½% senior notes due 2025 (B3/CCC+/B-) jumped more than 4 points to the 63 bid area on over $3.4 million of secondary volume, a source said.

The notes have clawed back some of the mid-July losses and are about 5 points better from the same day a week ago. The issue is down about 2½ points from a month ago.

Talen’s 10½% notes due 2026 (B3/CCC+/B-) were quoted nearly 2 points better at 71 bid on over $2.3 million of secondary volume Monday.

The issue traded over the prior week mostly at the 64 to 64¼ bid range before going out Friday in the 66¾ bid area.

The 2026 notes are about 1¼ points weaker month to date and well off the 91 bid range seen at the end of May.

Diamond Sports mixed

Diamond Sports Group’s 6 5/8% senior notes due 2027 (Caa2/CCC-) improved 5/8 point to 40¼ bid in thin trading Monday, a source said.

The bonds have declined 8 points month to date and are nearly 20 points softer since the start of June.

Diamond Sports’ paper has remained soft since 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.

Washington Prime flat

Washington Prime Group’s 6.45% notes due 2024 (C/D/CC) went out mostly flat from Friday at 61¼ bid, a source said.

The issue declined about 5¾ points over July.

Washington Prime filed for bankruptcy on June 13 following a forbearance period after the operating partnership missed a $23.2 million interest payment on the bonds that was due Feb. 15.

The Columbus, Ohio-based shopping center real estate investment trust has received conditional approval of the disclosure statement for its Chapter 11 plan of reorganization from the U.S. Bankruptcy Court for the Southern District of Texas.

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