Kaisa, Sunac slide; Nine Energy, EnLink up; CWT better; Air Methods, Envision drop

By Cristal Cody

Tupelo, Miss., Oct. 20 – Bonds in the distressed China property developer space traded flat to weaker following China Evergrande Group’s report on Wednesday that it has abandoned plans to sell a 50.1% stake in its Evergrande Property Services unit.

Kaisa Group Holdings Ltd.’s bonds dropped another 2¼ points to 7 points following the company’s downgrade on Tuesday.

Sunac China Holdings Ltd.’s dollar notes dove another 5 points to 7¾ points during the session after closing Tuesday off 2½ points to 7 points after Moody’s Investors Service changed the company’s outlook to stable from positive.

China Evergrande’s bonds were flat to slightly weaker on the day.

“They’re more or less unchanged, but the whole space in general was a little bit weaker because the sale that was supposed to happen looks like it’s not going to happen,” a trader said.

Market tone remained mostly positive on Wednesday with stocks mixed and measured volatility down as focus turned to a heavy round of third-quarter earnings reports due Wednesday and Thursday.

The iShares iBoxx High Yield Corporate Bond ETF edged up 3 cents to $87.27 for a second consecutive day of gains.

West Texas Intermediate crude oil benchmark futures for November deliveries settled 91 cents higher at $83.87 a barrel.

“Oil keeps climbing, it’s up another $1 today and just under $84 now, so the space definitely has some renewed love to it the last couple of months,” a source said.

Oilfield services company Nine Energy Service, Inc.’s 8¾% notes due 2023 (Caa2/D) rose 1¾ points.

Both Nine Energy and Talen Energy Supply LLC reported losses and other impacts from the Texas winter storm that hit in February.

Talen’s bonds were mixed with the paper trading about ½ point weaker to up 1 point.

In the gas space, EnLink Midstream Partners LP’s 6% perpetual preferreds (B1/B+/BB-) rallied over 2¼ points.

Paper from corporate travel management company CWT also continued to gain on Wednesday.

Meanwhile, health care transportation provider Air Methods Corp. has been under pressure so far in October.

ASP AMC Holdings Inc.’s Air Methods’ notes fell 1¼ points.

Envision Healthcare Corp.’s 8¾% senior notes due 2026 (Ca/CC) also were down over 2¼ points on Wednesday.

China real estate bonds weak

Shenzhen, China-based real estate developer Kaisa’s 9¾% senior notes due 2023 (B3/B) sank 7 points to 35 bid on $1.5 million of volume on Wednesday, a source said.

Moody’s downgraded Kaisa on Tuesday amid uncertainty over the company’s ability to repay its offshore debt due in the next 18 months.

Sunac’s dollar notes were down 5 points to 7 points by late afternoon.

The Tianjin, China-based property developer’s 7% senior notes due 2025 (B1/BB-) declined 7¾ points to 77½ bid with $1.5 million of paper traded on Wednesday.

China Evergrande’s 8¾% senior notes due 2025 (C/C/C) were seen mostly flat to about ¼ point weaker at the 20 bid range.

The Shenzhen, China-based real estate developer is nearing an official default after missing a bond payment in September.

Nine Energy, EnLink gain

Nine Energy Service’s 8¾% notes due 2023 (Caa2/D) made it past 50 bid on Wednesday with the notes quoted up 1¾ points at 51¼ bid, a source said.

Volume totaled $2 million.

The Houston-based oilfield services company will release its third-quarter earnings on Nov. 4.

Talen’s bonds were mixed with the paper trading about ½ point weaker to up 1 point, a source said.

The Woodlands, Tex., and Allentown, Pa.-based power company’s 10½% senior notes due 2026 (B3/CCC/B-) rose 1 point to 61½ bid in light trading totaling $1 million.

Dallas-based natural gas processor and pipeline operator EnLink Midstream Partners’ 6% perpetual preferreds (B1/B+/BB-) climbed over 2¼ points to 80¾ bid over the day. Trading supply totaled about $1.25 million.

CWT climbs higher

In other distressed secondary action, CWT’s 6¾% senior secured notes due 2025 (/D/C) added another 1¼ points on Wednesday to head out at 49¼ bid, a source said.

The bonds saw $2 million of trading volume after improving 1¾ points on Tuesday on $1 million of supply.

The Minneapolis-based corporate travel management company, formerly known as Carlson Travel Inc., announced in September that it has entered into a restructuring support agreement that will eliminate almost $900 million of debt.

Health-related bonds off

New York-based ambulance service provider ASP AMC Holdings’ notes remained soft on Wednesday, a source said.

Subsidiaries Air Methods’ and ASP AMC Merger Sub Inc.’s 8% senior notes due 2025 (Caa3/CCC) fell 1¼ points to 82½ bid on $4 million of secondary volume.

The notes have declined 7¾ points since Oct. 8.

Nashville-based Envision Healthcare’s 8¾% senior notes due 2026 (Ca/CC) also were down to 67 bid by the close.

The bonds traded over 2¼ points lower on $4.25 million of secondary supply.

Distressed returns up

Distressed index returns improved in the prior session.

The S&P U.S. High Yield Corporate Distressed Bond index’s one-day total returns rose to 0.23% from minus 0.45% on Monday.

Month-to-date total returns narrowed to minus 0.74% from minus 0.96% at the start of the week.

Year-to-date total returns increased to 29.27% on Tuesday from 28.97% on Monday.

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