NGL notes flat; PBF gains; AMC edges up; China Evergrande bonds mixed; Alpha higher

By Cristal Cody

Tupelo, Miss., Aug. 12 – Energy bonds traded flat to better in light activity in the distressed secondary market on Thursday as oil prices settled lower.

Tulsa, Okla.-based diversified midstream services provider NGL Energy Partners LP’s 7½% senior notes due 2026 (Caa1/CCC+) were unchanged by the close at 80 5/8 bid, according to a market source. The notes are down about 1 point week to date.

Parsippany-Troy Hills, N.J.-based petroleum refiner PBF Holding Co. LLC’s 6% senior notes due 2028 (B3/B+/B+) rose ½ point to 53 bid. The notes were quoted 1½ points higher from where the issue ended the prior week.

Bermuda- and Houston-based oil and gas drilling contractor Nabors Industries Inc.’s 5¾% senior notes due 2025 (Caa2/CCC-) were last seen active on Wednesday at 81 bid and mostly unchanged on the week, a source said.

Meanwhile, AMC Entertainment Holdings, Inc.’s 12% second-lien senior secured notes due 2026 (Ca/CCC-) improved ½ point after softening 1 point in the prior session.

In distressed emerging markets issues, China Evergrande Group’s dollar bonds were mixed after trading about 1 3/8 points to nearly 5 points better Wednesday on news the company is in discussions to sell some assets.

Also Thursday, Alpha Holding SA de CV’s 9% senior notes due 2025 (/D/) improved about ¾ point a day after the company’s bond ratings were further downgraded.

AMC notes up

AMC’s 12% second-lien senior secured notes due 2026 (Ca/CCC-) rose ½ point to 87½ bid in steady secondary activity on Thursday, a source said.

The notes shed 1 point in the prior session on heavy trading supply of $21 million.

The Leawood, Kan.-based movie theater chain’s notes are up about 2¾ points week to date after AMC reported higher second-quarter revenue and lower quarterly net losses on Monday.

China Evergrande mixed

In other distressed issues, China Evergrande Group’s 8¼% senior notes due 2022 (Caa2/CCC-/CCC) fell 1 7/8 points during the session to 59 1/8 bid, a market source said.

The notes had climbed nearly 5 points in strong trading activity on Wednesday.

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

The issue is trading about 2½ points better since the end of July.

China Evergrande’s 11½% senior notes due 2023 (Caa2/CCC-/CCC) rose 1 point to head out at 52 bid after jumping 4 3/8 points to 51 bid on Wednesday.

The issue has improved about 7 points since the start of the month after declining from the 94 bid area in June.

The Shenzhen, China-based company said in a filing on Tuesday with the Hong Kong Stock Exchange that it is in discussions to sell certain company assets, including interests in subsidiaries China Evergrande New Energy Vehicle Group Ltd. and Evergrande Property Services Group Ltd.

Alpha notes gain

Alpha Holding’s 9% senior notes due 2025 (/D/) rose about ¾ point to 12¾ bid on Thursday, well off the 69½ bid range seen in April, a source said.

S&P Global Ratings dropped the bond ratings on Wednesday after it said the company missed an $18 million interest payment on the 9% issue.

Alpha reported on Wednesday that it filed for a voluntary restructuring under Mexico’s bankruptcy law.

The Mexico-based commercial financing company announced in April it would restate its financial statements for 2018, 2019 and 2020 quarterly results due to accounting errors.

Fitch Ratings withdrew the company’s bond ratings on Aug. 4, while Moody’s Investors Service withdrew the ratings on June 22.

Distressed returns narrow

Distressed index returns moderated on Wednesday.

The S&P U.S. High Yield Corporate Distressed Bond index total return on Wednesday was 0.05%, compared to 0.44% on Tuesday and minus 0.78% on Monday.

Month-to-date total returns on Wednesday improved to minus 0.77% from minus 0.82% on Tuesday and minus 1.26% at the start of the week.

Year-to-date total returns rose to 22.94% on Wednesday from 22.88% on Tuesday and 22.34% on Monday.

Overall market tone remained stronger on Thursday while oil prices retreated.

The iShares iBoxx High Yield Corporate Bond ETF closed up 15 cents to $87.27 after adding 14 cents on Wednesday following declines of 20 cents on Tuesday and 20 cents on Monday.

North Sea Brent crude oil futures for October deliveries shed 13 cents to settle the day at $71.31 a barrel.

West Texas Intermediate crude oil benchmark futures for September deliveries settled down 16 cents at $69.09 a barrel, while October deliveries fell 12 cents to settle at $68.90 a barrel.

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