AMC bonds jump; PBF, Transocean decline; China dollar bonds stable; Evergrande soft

By Cristal Cody

Tupelo, Miss., Aug. 9 – Distressed bonds in reopening sectors improved on Monday while energy bonds mostly softened as oil prices sank more than $1.50 over the session.

AMC Entertainment Holdings, Inc.’s 12% second-lien senior secured notes due 2026 (Ca/C) jumped 1¼ points after the company reported strong second-quarter revenue.

The secured notes are down more than 10 points from a month ago.

In the energy space, PBF Holding Co. LLC’s 9¼% senior secured notes due 2025 (Ba3/BB/BB) pulled back Monday after climbing about 5/8 point on Friday.

Transocean Inc.’s 8% debentures due 2027 (C/CCC) fell 1 7/8 points over the day.

“Reopening sectors + energy are back on the list of interesting opportunities here following very weak performance in recent weeks,” BofA Securities, Inc. analysts said in a note on Friday.

Meanwhile, China Evergrande Group’s dollar bonds traded flat to softer after S&P Global Ratings on Friday downgraded the company a second time in less than two weeks.

The Chinese real estate developer’s bonds have plunged about 40 points since June.

“Evergrande is in the high-40ies, an improvement from low-40ies a week ago,” the BofA analysts said. “Overall, we judge the likelihood of a contagion to broader Chinese credit and EM as modest to moderate.”

S&P said on Friday it believes China Evergrande’s “nonpayment risk is escalating” because of increased asset freezes from contractors over non-payments.

China Huarong Asset Management Co., Ltd.’s notes were stable as investors wait on if the company will file 2020 financial statements before a default deadline.

The majority state-owned Beijing-based financial asset management company’s “bonds are trading in the high-60ies, unchanged for the month,” the BofA note said.

S&P said in a release on Monday that “risks facing Chinese finance companies could decrease as the overall economic environment is improving in China.”

AMC bonds up

AMC’s 12% second-lien senior secured notes due 2026 (Ca/C) were quoted Monday at 86 bid, up 1¼ points from where the notes last traded flat on Friday, a source said.

The secured notes are down 1¾ points from a week ago and more than 10 points from a month ago.

The Leawood, Kan.-based movie theater chain on Monday reported second-quarter revenue totaled $444.7 million for the period ended June 30, compared to $18.9 million last year during Covid-19 lockdowns.

Second quarter net losses fell to $344 million from $561.2 million a year ago.

AMC said its 593 domestic theaters were open as of June 30, while the majority of its international locations did not reopen until early June.

During the second quarter, AMC raised $1.25 billion of new equity capital, boosting the company’s quarter ending liquidity to more than $2 billion, Adam Aron, AMC’s chairman and chief executive officer, said in the earnings release.

PBF notes slip

PBF Holding’s 9¼% senior secured notes due 2025 (Ba3/BB/BB) softened ¼ point over the day to 88½ bid, a source said.

The notes are down about 7/8 point from a week ago. The issue has declined over 14 points since June and fell below par in July.

PBF’s 7¼% senior notes due 2025 (B3/B+/B+) were mostly unchanged on Monday at the 58 bid area.

The Parsippany, N.J.-based petroleum refiner’s notes have declined more than 20 points since June.

Transocean lower

Transocean’s 8% debentures due 2027 (C/CCC) fell 1 7/8 points to 68 1/8 bid after softening about ¼ point on Friday, a market source said.

The Vernier, Switzerland-based company’s bonds traded more than 5 points weaker month to date and more than 17 points down from a month ago.

China Evergrande weak

China Evergrande Group’s 9½% senior notes due 2024 (Caa2/CCC-/CCC) fell about 1½ points to 42¼ bid on Monday, a source said.

The bonds have lost more than 40 points over the past two months.

China Evergrande’s 8¼% senior notes due 2022 (Caa2/CCC-/CCC) were last seen on Friday flat at 53 bid after declining over 7½ points in the prior session.

The issue has dropped from the 85 bid range a month ago and the 93 bid area at the start of June.

Moody’s Investors Service lowered the Shenzhen, China-based company’s ratings a week ago, while Fitch Ratings downgraded the company in July.

Distressed returns up

Distressed index returns ended the prior week better.

The S&P U.S. High Yield Corporate Distressed Bond index had a one-day total return of 0.04% on Friday, up from 0.02% on Thursday, minus 0.18% on Wednesday, minus 0.26% on Tuesday and minus 0.10% on Aug. 2.

Month-to-date total returns for the first week of August posted at minus 0.48% on Friday versus minus 0.52% on Thursday, minus 0.54% on Wednesday and minus 0.36% on Tuesday.

Year-to-date total returns on Friday were 23.3%, compared to 23.25% on Thursday, 23.23% on Wednesday, 23.45% on Tuesday and 23.07% on Aug. 2.

Overall market tone was mostly weaker during Monday’s session.

North Sea Brent crude oil futures for October deliveries declined $1.66 to settle at $69.04 a barrel.

West Texas intermediate crude oil benchmark futures for September deliveries settled the day $1.80 lower at $66.48 a barrel, while October deliveries also fell $1.80 to settle at $66.30 a barrel.

The iShares iBoxx High Yield Corporate Bond ETF fell 20 cents to $87.18.

Measured market volatility rose 3.53%.

The Chicago Board Options Exchange’s CBOE Volatility index headed out Monday at 16.72.

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