Talen bonds slide; Transocean, NGL lower; PBF edges up; Midas quiets; Endo softens

By Cristal Cody

Tupelo, Miss., Aug. 19 – Talen Energy Supply LLC’s bonds plunged about 3½ points to 10 points on Thursday following S&P Global Ratings’ downgrade.

Talen’s 10½% senior notes due 2026 (B3/CCC/B-) dove 9½ points by late afternoon.

Energy bonds were mixed but mostly softer as oil prices sank a fourth consecutive session.

Transocean Inc.’s paper declined about 2¾ points to 3 points.

NGL Energy Partners LP’s 7½% senior notes due 2026 (Caa1/CCC+) fell about ½ point.

PBF Holding Co. LLC’s 9¼% senior secured notes due 2025 (Ba3/BB/BB) edged up about ¼ point.

Elsewhere, Midas Intermediate Holdco II LLC’s paper quieted on Thursday with the 7 7/8% senior notes due 2022 (Caa3/CCC-) holding onto gains made Wednesday.

In the distressed pharmaceuticals space, Endo International plc’s 6% senior notes due 2028 (Caa2/CCC+) traded down about ½ point by the close.

Looking at Covid-19-impacted issuers, AMC Entertainment Holdings, Inc.’s 12% second-lien senior secured notes due 2026 (Ca/C) fell 1 point in the secondary market.

Talen bonds lurch

Talen’s 6½% senior notes due 2025 (B3/CCC/B-) dropped about 3½ points to 37½ bid in heavy trading activity by the close on Thursday, a market source reported.

Wednesday’s session saw the notes decline about 5 points to 41 bid.

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

Talen’s 10½% senior notes due 2026 (B3/CCC/B-) sank 9½ points to 40¾ bid by late afternoon after softening 1¾ points to 50¼ bid on Wednesday.

The issue traded at 71¼ bid at the beginning of August.

S&P said Thursday it downgraded the company and its senior secured and unsecured bonds on expectations of lower profitability, high leverage and negative free operating cash flow generation in the near term for The Woodlands, Tex., and Allentown, Pa.-based power company.

Transocean declines

In other energy issues, Transocean’s 7½% senior notes due 2026 (Ca/CCC+) declined about 3 points to 69 bid in strong trading activity on Thursday, a source said.

The Vernier, Switzerland-based offshore driller’s 6.8% senior notes due 2038 (C/CCC) also softened about 2¾ points to 48 bid by the close.

NGL off ½ point

NGL Energy Partners’ 7½% senior notes due 2026 (Caa1/CCC+) fell about ½ point to the 79½ bid area during the session, according to a market source.

The Tulsa, Okla.-based diversified midstream services provider’s notes were about 1 point softer week to date.

PBF modestly better

PBF Holding’s 9¼% senior secured notes due 2025 (Ba3/BB/BB) improved about ¼ point to 88¼ bid over the day, a source said.

The Parsippany, N.J.-based petroleum refiner’s notes remain soft from where the issue traded at the 103 bid area at the start of the summer.

Midas notes stable

In other distressed issues, Midas Intermediate Holdco II’s bonds quieted on Thursday with the 7 7/8% senior notes due 2022 (Caa3/CCC-) last seen trading Wednesday at 82¾ bid, a source said.

The issue from Midas, doing business as Service King, rallied by the close on Wednesday after trading as low as 74½ bid at the start of the day.

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

Endo paper softens

Meanwhile Thursday, Endo Finance LLC’s 6% senior notes due 2028 (Caa2/CCC+) fell about ½ point to 62¼ bid, a source said.

The notes were about 1¼ points softer week to date and over 4 points weaker month to date.

The Dublin-based pharmaceuticals maker in July announced a $35 million opioid-related lawsuit settlement.

AMC bonds down

AMC’s 12% second-lien senior secured notes due 2026 (Ca/C) dropped 1 point to 86 7/8 bid over the day, a source said.

The secured notes were down more than 1 point on the week.

The Leawood, Kan.-based movie theater chain’s bonds traded at the 102 bid area at the start of July.

Distressed returns soft

Overall market tone was mostly soft on Thursday as oil prices sank a fourth consecutive session.

North Sea Brent crude oil futures for October deliveries dropped $1.78 to settle at $66.45 with prices down $4.14 week to date.

West Texas Intermediate crude oil benchmark futures for September deliveries settled down $1.77 to $63.69 a barrel. September prices have dropped $4.75 week to date.

October crude oil benchmark futures declined $1.71 to settle the day at $63.50 a barrel, down $4.71 over the week.

Volatility was lower on Thursday.

The iShares iBoxx High Yield Corporate Bond ETF edged down 1 cent to $87.08.

The Chicago Board Options Exchange’s CBOE Volatility index rose a modest 0.28% to 21.63 after climbing 20.44% on Wednesday and 11.1% on Tuesday.

Distressed index returns remained weak on Wednesday.

The S&P U.S. High Yield Corporate Distressed Bond index one-day total return was zero percent, improved from minus 0.12% on Tuesday and minus 0.27% on Monday.

Month-to-date total returns were at minus 1.36% in the prior session, compared to minus 1.37% on Tuesday and minus 1.28% at the week’s start.

Distressed year-to-date total returns totaled 22.21% on Wednesday versus 22.2% on Tuesday and 22.35% on Monday.

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