Talen bonds lower; Moss Creek softens; Laredo declines; Diamond Sports notes weaken

By Cristal Cody

Tupelo, Miss., Aug. 16 – Energy bonds drifted lower on Monday in thin secondary trading as oil futures declined.

“Oil is off a dollar, but I didn’t see a lot of trading in energy paper today,” a market source said. “It’s just spotty around recent new issues. Pretty quiet all over.”

Talen Energy Supply LLC’s bonds fell about ¾ point to over 2½ points on Monday after sliding about 1½ points to 8 points on Friday following the company’s second-quarter earnings release.

Moss Creek Resources Holdings Inc.’s 7½% senior notes due 2026 (Caa1/B) softened more than 1 point after ending the prior week down nearly 3½ points.

Laredo Petroleum, Inc.’s new 7¾% senior notes due July 2029 (B3/B) dropped 1 1/8 points and headed out with a yield of nearly 9½% as the issue teeters near the distressed space.

Trading action was slower in the mid-August session, while overall market tone closed stronger.

“It opened up kind of lower but then rallied back,” a source said. “The Dow’s closing at a record; Treasuries are up; the Fed’s continuing to buy U.S. Treasuries and mortgage-backed securities; so, bid for the product continues.”

In other distressed issues, Diamond Sports Group LLC’s notes softened as parent Sinclair Broadcast Group, Inc.’s broadcast agreement with DISH Network Corp. was set to expire on Monday.

Exela Technologies’ 10% senior secured first-lien notes due 2023 (Caa3/CCC-) were quiet but ended Friday up 3 points on the week following the company’s second-quarter earnings release.

Talen notes soften

Talen’s bonds traded about ¾ point to over 2½ points weaker on Monday in lighter secondary action.

“It seems like they’re really struggling,” one source said. “They’re in the 50s now.”

Talen’s 6½% senior notes due 2025 (B3/CCC+/B-) fell over 2½ points to trade near the 48½ bid area on $1 million of secondary supply during the session, another source reported.

The notes shed 8 points on Friday on more than $6.5 million of trading volume.

Talen’s 7¼% senior secured notes due 2027 (Ba3/BB-/BB-) declined about ¾ point to the 84¾ bid area in heavier trading totaling $11 million after dropping 1½ points on Friday on over $32.5 million of volume.

Talen’s 10½% notes due 2026 (B3/CCC+/B-) dropped over 2¼ points from Friday to head out at the 53¼ bid range on $3 million of paper traded on Monday.

The notes sank 6½ points ahead of the weekend to 55½ bid on $9.75 million of secondary activity.

Talen reported second-quarter results in a conference call following the market’s close on Thursday.

Moss Creek slips

Houston-based oil and gas exploration company Moss Creek Resources Holdings’ 7½% senior notes due 2026 (Caa1/B) were quoted down 1 1/8 points at 85 3/8 bid by the close on Monday on over $2.5 million of trading action, a source said.

The notes headed out Friday unchanged but nearly 3½ points softer on the week.

Parent company Surge Energy US Holdings Co. announced on Thursday that Moss Creek has acquired leasehold interest and wells from Apache Corp. in Howard County, Tex., for $37.5 million in a transaction that closed on July 30.

Laredo trades down

Laredo Petroleum’s 7¾% senior notes due July 2029 (B3/B) softened 1 1/8 points to 90 5/8 bid on $4 million of trading supply during the session, a source said.

The notes have improved from trading at lows in the 89½ bid range a week ago.

The Tulsa, Okla.-based energy company sold $400 million of the bonds on July 13 at par.

Diamond Sports drops

Diamond Sports Group’s 5 3/8% senior secured notes due 2026 (B2/CCC+) fell about 1 point to 60¼ bid in the distressed space on Monday, a source said.

The bonds added ½ point on Friday and were about 1¼ points better on the week.

Parent company Sinclair Broadcast announced in the previous week that it was unlikely a carriage agreement with DISH would be reached before its current agreement expired Monday.

In June, Sinclair reported unsuccessful attempts to secure new funding for Diamond Sports, a Chesapeake, Va.-based sports broadcast group.

Exela notes perk up

Exela Technologies’ bonds were last seen trading on Friday at 73¾ bid, up 3 points on the week, a source said.

Debt issuer Exela Intermediate LLC’s 10% senior secured first-lien notes due 2023 (Caa3/CCC-) have soared over the summer after leaving the 35 bid area at the end of May.

Exela announced on June 30 that it completed a $100 million at-the-market equity program and entered into an additional $150 million at-the-market equity program.

The Irving, Tex.-based software and services company reported on Aug. 10 that its second-quarter revenue fell 4.8%, while net losses declined to $19.4 million from $48.7 million in the same quarter last year.

Distressed returns weaken

Market tone was mostly positive, while oil prices settled lower on Monday.

The iShares iBoxx High Yield Corporate Bond ETF closed up 3 cents at $87.49.

North Sea Brent crude oil futures for October deliveries declined $1.08 to settle at $69.51 a barrel.

West Texas intermediate crude oil benchmark futures for September deliveries settled down $1.15 at $67.29 a barrel, and October deliveries dropped $1.16 cents to settle at $67.05 a barrel.

Distressed index returns ended Friday weaker.

The S&P U.S. High Yield Corporate Distressed Bond index total return declined to minus 0.66% on Friday. The return for Thursday was 0.45% versus 0.05% on Wednesday, 0.44% on Tuesday and minus 0.78% on Aug. 9.

Distressed month-to-date total returns posted at minus 0.98% on Friday versus minus 0.33% on Thursday, minus 0.77% on Wednesday, minus 0.82% on Tuesday and minus 1.26% in the same session a week ago.

Year-to-date total returns declined to 22.68% on Friday from 23.49% on Thursday, 22.94% on Wednesday, 22.88% on Tuesday and 22.34% at the start of the prior week.

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