PBF mostly softer; Transocean bonds mixed; AMC edges higher; China Evergrade weakens

By Cristal Cody

Tupelo, Miss., Aug. 17 – Distressed energy bonds mostly softened in secondary trading on Tuesday as crude oil prices declined and measured market volatility climbed more than 10%.

PBF Holding Co. LLC’s bonds were flat to softer with the 7¼% senior notes due 2025 (B3/B+/B+) down about 1 point by the market close.

Transocean Inc.’s paper was mixed. The 7½% senior notes due 2031 (Ca/CCC) improved about 2 points, while the 8% debentures due 2027 (C/CCC) declined 1½ points.

Elsewhere, AMC Entertainment Holdings, Inc.’s 12% second-lien senior secured notes due 2026 (Ca/C) picked up ½ point in light trading action.

In distressed emerging markets issues, China Evergrande Group’s dollar bonds slid further on Tuesday following reports the company’s chairman will step down as chairman from its property unit, Hengda Real Estate Development Co.

China Evergrande’s 9½% senior notes due 2024 (Caa2/CCC-/CCC) fell about 2½ points after declining nearly 4 points on Monday.

PBF flat to softer

PBF Holding’s 7¼% senior notes due 2025 (B3/B+/B+) softened about 1 point to head out Tuesday at 56½ bid, a market source said.

The Parsippany, N.J.-based petroleum refiner’s notes have declined about 1¾ points since Friday.

PBF’s 9¼% senior secured notes due 2025 (Ba3/BB/BB) rose about ¼ point in thin volume to the 89 bid area over the day.

The issue was mostly unchanged week to date.

Transocean mixed

Transocean’s 7½% senior notes due 2031 (Ca/CCC) improved about 2 points to 57½ bid, a source said Tuesday.

The notes are trading about 1 point better from Friday.

The Vernier, Switzerland-based offshore driller’s 8% debentures due 2027 (C/CCC) were quoted going out at 69 bid, 1½ points weaker from where the issue was last seen trading on Friday.

AMC improves

In other distressed bonds, AMC’s 12% second-lien senior secured notes due 2026 (Ca/C) rose ½ point over Tuesday’s session to 88 bid, a source said.

The secured notes are mostly unchanged from Friday.

The Leawood, Kan.-based movie theater chain earlier in August reported stronger second-quarter revenue and fewer quarterly net losses.

AMC raised $1.25 billion of new equity capital during the second quarter.

China Evergrande lower

Also Tuesday, China Evergrande Group’s 8¼% senior notes due 2022 (Caa2/CCC-/CCC) dropped about 4 points to 52 bid after softening ½ point on Monday, a market source said.

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

China Evergrande’s 9½% senior notes due 2024 (Caa2/CCC-/CCC) fell about 2½ points to just below 40 bid in thin trading on Tuesday, the source said.

The notes declined nearly 4 points on Monday and have plunged from the 94 bid area in June.

The Shenzhen, China-based company said in a stock exchange filing last week 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.

Distressed index soft

Distressed index returns improved on Monday but remained soft so far in August.

The S&P U.S. High Yield Corporate Distressed Bond index total return in the previous session was minus 0.27%, better than the minus 0.66% return on Friday and the minus 0.78% return in the same session a week ago.

Month-to-date total returns were at minus 1.28% on Monday, compared to minus 0.98% on Friday and minus 1.26% in the same session last week.

Year-to-date total returns were 22.35% on Monday versus 22.68% on Friday and 22.34% in the week ago session.

Market tone weakened as stocks and oil prices settled lower and measured market volatility climbed more than 10% on Tuesday.

The iShares iBoxx High Yield Corporate Bond ETF fell 20 cents to $87.29.

North Sea Brent crude oil futures for October deliveries settled down 48 cents at $69.03 a barrel following an $1.08 drop on Monday.

West Texas Intermediate crude oil benchmark futures for September deliveries declined 70 cents to settle at $66.59 a barrel after declining $1.15 in the prior session. October crude deliveries settled 71 cents lower at $66.34 a barrel after shedding $1.16 cents on Monday.

The Chicago Board Options Exchange’s CBOE Volatility index rose 11.1% to 17.91 on Tuesday.

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