Midas notes rebound; Transocean up; Talen, Washington Prime, Diamond Sports down

By Cristal Cody

Tupelo, Miss., Aug. 18 – Midas Intermediate Holdco II LLC’s bonds recovered by the close on Wednesday after sinking in the distressed secondary market at the start of the day.

The 7 7/8% senior notes due 2022 (Caa3/CCC-) issued by Midas Intermediate Holdco II and doing business as Service King headed out at 82¾ bid after trading at 74½ bid out of the gate on Wednesday, a source said.

“The bonds were down 5 points yesterday and some guys tried to take them down another 9 points today, but it’s since rallied all the way back,” the source said.

The Richardson, Tex.-based auto body repair provider’s issue went out on Tuesday at 83¾ bid, down from where the paper last traded at 87 bid in the prior week and the 95 bid area at the start of the month.

Overall market tone was weaker on Wednesday with stock and oil prices depressed and measured market volatility up more than 20%.

Distressed energy bonds were “somewhat muted” with energy names on average down about ¼ point to ½ point over the day, a source said.

Talen Energy Supply LLC’s bonds dropped about 1¾ points to 5 points in mostly light secondary volume.

Transocean Inc.’s 6.8% senior notes due 2038 (C/CCC) were better by more than 1½ points in steady supply.

In other distressed issues, Washington Prime Group, LP’s 6.45% notes due 2024 (C/D/CC) sank 1¾ points in early trading before heading out down 1 7/8 points.

Diamond Sports Group LLC’s notes dipped about ¼ point in midweek trading after parent Sinclair Broadcast Group, Inc.’s broadcast agreement with DISH Network Corp. expired Monday.

Distressed secondary action overall was fairly light in the late summer session, sources report.

“There was some sporadic trading in names, but for the most part, it was a usual August where there’s not a great deal going on,” one source said.

Talen weakens

Talen’s notes traded down 1¾ points to 5 points by the end of the session, a market source said.

The company’s 6½% senior notes due 2025 (B3/CCC+/B-) declined about 5 points to head out at 41 bid on $1.7 million of paper traded.

The notes are down more than 20 points since the start of the month.

Talen’s 10½% notes due 2026 (B3/CCC+/B-) slipped 1¾ points to 50¼ bid on trading supply totaling $1 million on Wednesday.

The Woodlands, Tex., and Allentown, Pa.-based power company’s issue has softened from where it traded at 71¼ bid at the beginning of August.

Transocean better

In other energy bonds, Transocean’s 6.8% senior notes due 2038 (C/CCC) jumped more than 1½ points by the close to trade near the 50¾ bid area on over $3 million of trading supply on Wednesday, a source said.

The Vernier, Switzerland-based offshore driller’s issue was about ¾ point better week to date.

Washington Prime drops

Washington Prime Group’s 6.45% notes due 2024 (C/D/CC) fell 1 7/8 points to 50 7/8 bid over the day, a source said.

The notes have declined more than 20 points since mid-June.

A hearing to approve Washington Prime’s disclosure statement and confirm its Chapter 11 bankruptcy plan is scheduled for Aug. 30.

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 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.

Diamond Sports softens

Diamond Sports Group’s 5 3/8% senior secured notes due 2026 (B2/CCC+) were down about ¼ point at 60¾ bid by the close on Wednesday, a source said.

The issue is flat from where it went out on Friday and more than 15 points weaker from early June.

Diamond Sports Group’s 6 5/8% senior notes due 2027 (Caa2/CCC-) fell about ¼ point to trade near the 38¼ bid area on Wednesday.

The bonds have declined about 1 point since Friday and more than 20 points since the start of June.

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

Sinclair announced last week that it was unlikely a carriage agreement with DISH would be reached before its current agreement expired on Monday.

Distressed index improves

Negative distressed index returns narrowed on Tuesday.

The S&P U.S. High Yield Corporate Distressed Bond index total return improved to minus 0.12% from minus 0.27% on Monday.

Month-to-date total returns widened to minus 1.37% on Tuesday versus minus 1.28% at the week’s start.

Year-to-date total returns softened to 22.2% in the prior session from 22.35% on Monday.

Market tone weakened on Wednesday following the release of soft economic data and the minutes from the Federal Reserve’s last policy meeting.

The Chicago Board Options Exchange’s CBOE Volatility index jumped 20.44% to 21.57 after climbing 11.1% on Tuesday.

The iShares iBoxx High Yield Corporate Bond ETF closed off 20 cents at $87.09.

Oil prices remained soft a third consecutive session.

North Sea Brent crude oil futures for October deliveries settled at $68.23, down 80 cents after declining 48 cents on Tuesday and $1.08 on Monday.

West Texas Intermediate crude oil benchmark futures for September deliveries dropped $1.13 to settle at $65.46. September prices declined 70 cents on Tuesday and $1.15 on Monday.

October crude oil benchmark futures settled at $65.21, down $1.13 on Wednesday following a 71-cent drop on Tuesday and a decline of $1.16 on Monday.

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