Occidental dips; PBF edges lower; Air Methods softens; Mallinckrodt down; Kaisa active

By Cristal Cody

Tupelo, Miss., Oct. 27 – Energy bonds were little changed as oil slid nearly $2 on Wednesday, while China’s property developer space saw continued distressed secondary interest.

The decline in oil prices was not “really an impact in bond-land too much,” a source said, noting gas prices were still up 5% to 6% following reports of a warmer winter.

Occidental Petroleum Corp.’s junk notes were the “most active energy bonds” over the day and traded down about 1/8 point to 3/8 point, the source said.

Petroleum refiner PBF Holding Co. LLC’s notes saw a few trades on Wednesday and went out “more or less unchanged.”

Oil prices sank about $2 along with market tone during the session with stocks outside the tech sector lower and measured volatility up nearly 10%.

West Texas Intermediate crude oil benchmark futures for December deliveries settled down $1.99 at $82.66 a barrel.

The Chicago Board Options Exchange’s CBOE Volatility index rose 8.14% to 17.28 by the close.

The iShares iBoxx High Yield Corporate Bond ETF softened 7 cents to $86.94.

ASP AMC Holdings Inc.’s Air Methods notes crept lower on Wednesday with the 8% senior notes due 2025 (Caa3/CCC) trading over 10 points weaker month to date.

The ambulance service provider’s bonds have been under pressure with surprise billing legislation expected to curb out-of-network fees, reduce its margin and expose it to heavier regulations, a source said.

Mallinckrodt LLC’s 5 5/8% notes due 2023 were active on Wednesday and traded down about 2 points.

In China’s distressed property developer space, Kaisa Group Holdings Ltd.’s bonds went out flat to better following downgrades by S&P Global Ratings and Fitch Ratings.

The company faces uncertainty over its ability to refinance dollar bond maturities and a coupon payment due through 2022.

Kaisa has $400 million of dollar notes due on Dec. 7, S&P noted.

The space has steadily weakened following China Evergrande Group’s missed bond payment in September, Fantasia Holdings Group Co. Ltd.’s missed debt payment earlier in October and Modern Land (China) Co., Ltd.’s missed note payment on Monday.

PBF better on month

PBF Holding’s 6% senior notes due 2028 (Caa1/B/B+) softened about 3/8 point on Wednesday to the 72 bid range after gaining 1 3/8 points in the prior session, according to market sources.

The issuer has seen some pressure in October but “they’ve definitely rebounded” from late September, one source said.

The Parsippany, N.J.-based issuer’s 6% notes traded with a handle in the high 50s in September.

Air Methods lower

ASP AMC Holdings’ notes remained weaker over the day, a trader said.

Subsidiaries Air Methods’ and ASP AMC Merger Sub Inc.’s 8% senior notes due 2025 (Caa3/CCC) fell to 77¾, 78 during the session.

“Those were 79 yesterday and a couple days ago, they were at 80, so it’s leaking lower,” the market source said. “It was at 90 at the beginning of October.”

The New York-based ambulance service provider’s bonds have declined about ¾ point to 1 point week to date.

Mallinckrodt weaker

Mallinckrodt’s 5 5/8% notes due 2023 softened over the day to 45¼ bid, down about 2 points from where the issue was last seen in the prior week, a source said.

The pharmaceuticals company (/D) is underway with its Chapter 11 bankruptcy process in the U.S. Bankruptcy Court for the District of Delaware.

The company’s opioid-related lawsuits also are moving through the bankruptcy court.

Mallinckrodt, based in Dublin and St. Louis, filed for Chapter 11 on Oct. 12, 2020.

Kaisa active in distressed

Kaisa Group’s bonds were flat to better following the ratings downgrades on Wednesday, a source said.

Kaisa’s 9¾% senior notes due 2023 (B3//CCC+) jumped 2½ points in early trading to 34 bid before heading out 1½ points stronger on the day at 33 bid, a source said.

The notes finished Tuesday down 2½ points.

The Shenzhen, China-based real estate developer’s 10 7/8% senior notes due 2023 (B3//CCC+) traded about ¼ point better to 1¼ points weaker during the session before going out mostly unchanged at 32¼ bid.

Distressed returns

Distressed index returns softened on Tuesday.

The S&P U.S. High Yield Corporate Distressed Bond index’s one-day total return fell to minus 0.01% from 0.06% on Monday.

Month-to-date total returns were unchanged at minus 0.77% on Tuesday.

Year-to-date total returns totaled 29.22% on Tuesday, compared to 29.23% at the start of the week.

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