Diamond Sports soft; Evergrande edges lower; Digicel up; Talen Energy, Transocean gain

By Cristal Cody

Tupelo, Miss., Oct. 25 – Diamond Sports Group LLC’s paper traded mostly flat to weaker on Monday with the notes down about 8 points to over 10 points since the start of the month.

China’s property developer space also remained weak in the distressed secondary market.

China Evergrande Group’s offshore bonds were flat to modestly softer after going out Friday about 2 points stronger on the week.

In other secondary activity, Digicel Group Ltd.’s bonds climbed about 1¼ points to 1¾ points following the announcement that Telstra Corp. Ltd. will acquire its South Pacific operations in partnership with the Australian government.

Talen Energy Supply LLC’s bonds continued to gain ground on Monday after trading up nearly 10 points in the prior week.

Transocean Ltd.’s bonds were seen about 1 point to 2 points better in light trading during the session.

Oil was unchanged to higher on the day.

West Texas Intermediate crude oil benchmark futures for December deliveries settled flat at $83.76 a barrel after climbing $1.26 on Friday.

Market volatility was lower on Monday with stocks gaining amid a heavy pace of third-quarter earnings reports and an eye toward the Federal Reserve’s monetary policy meeting on Nov. 3.

The iShares iBoxx High Yield Corporate Bond ETF closed up 15 cents to $86.99.

Diamond Sports slips

Diamond Sports’ 5 3/8% senior secured notes due 2026 (Caa1/CCC) saw strong secondary action on Monday but went out modestly weaker to unchanged at 57¾ bid, a market source said.

The bonds ended the prior week down about 1 5/8 points and are trading over 8 points weaker month to date.

Diamond Sports’ 6 5/8% senior notes due 2027 (Ca/CC) were ½ point lower from Friday at 31¾ bid by the day’s close.

The notes ended the prior week off about 2¾ points and have declined more than 10 points since the start of the month.

Diamond Sports parent Sinclair Broadcast Group Inc. reported on Oct. 7 that it made a Sept. 28 proposal to secure new funding for the Chesapeake, Va.-based sports broadcast group.

The proposal follows Sinclair’s report in June that it made two proposals dated March 22 and April 29 to lenders and noteholders of Diamond Sports.

Evergrande active

China Evergrande’s 8¾% senior notes due 2025 (C/C/C) were down about 1/8 point at 22 bid in strong trading on Monday following reports the company has resumed some building projects, a source said.

The bonds went out Friday over 2 points higher on the week.

Evergrande last week reportedly made a bond payment that staved off an expected default following a missed payment in September.

The Shenzhen, China-based real estate developer also announced last week that it had abandoned plans to sell a 50.1% stake in its Evergrande Property Services unit.

Digicel climbs

Caribbean telecom services provider Digicel’s bonds climbed about 1¼ points to 1¾ points on about $4 million of trading volume on Monday following the acquisition announcement of its South Pacific operations, a source said.

Digicel International Finance Ltd.’s 13% senior notes due 2025 (Caa2//B-) traded 1¾ points better at 103 bid and yielding 12.87% during the session.

Melbourne-based Telstra announced on Monday that it will purchase Papua New Guinea-based Digicel Pacific Ltd. for $1.6 billion, plus up to $250 million more subject to business performance, with the bulk of funding expected from Australia’s government.

The transaction is expected to close in the first quarter of 2022.

Digicel is a Kingston, Jamaica-based telecommunications provider.

Talen improves

Talen Energy Supply’s 10½% senior notes due 2026 (B3/CCC/B-) rose ½ point to head out Monday at 66 bid, a source said.

The notes picked up 2 points in trading on Friday and ended the week 9 1/8 points better.

The Woodlands, Tex., and Allentown, Pa.-based power company’s bonds have been under pressure since declining from the 95 bid area in May.

Transocean stronger

Transocean’s bonds were seen about 1 point to 2 points better in light trading over the day, a source said.

The Vernier, Switzerland-based offshore driller’s 6.8% notes due 2038 (C/CCC) improved 2 points to 64 bid.

Transocean’s 9.35% notes due 2041 (C/CCC-/) rose about 1 point to 69¼ bid on $1 million of trading action.

Distressed index soft

Distressed index returns declined on Friday.

The S&P U.S. High Yield Corporate Distressed Bond index’s one-day total returns were minus 0.02%, compared to 0.09% on Thursday, 0.02% on Wednesday, 0.23% on Tuesday and minus 0.45% at the start of last week.

Month-to-date total returns widened to minus 0.83% on Friday from minus 0.8% on Thursday, minus 0.72% on Wednesday and minus 0.74% on Tuesday but were improved from minus 0.96% on Oct. 18.

Year-to-date total returns were 29.15% on Friday versus 29.18% on Thursday, 29.29% on Wednesday, 29.27% on Tuesday and 28.97% at the week’s start.

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