Energy ‘well bid’; PBF bonds rally; Nine Energy up; Transocean mixed; Diamond Sports lower

By Cristal Cody

Tupelo, Miss., Oct. 28 – Petroleum refiner PBF Energy Inc.’s bonds rallied about 1½ points to 1¾ points in heavy secondary supply on Thursday after the company posted strong third-quarter earnings.

Nine Energy Service, Inc.’s 8¾% notes due 2023 (Caa2/D) also were lifted over 2¾ points.

Energy bonds have been “very well bid,” a source said Thursday. “Oil is off the recent highs, but it’s still above $80. That’s fueled better buyers across the board in energy.”

With oil production cranking up headed into the winter, “we’ve seen prices across the energy sector do better,” the source said.

Energy bonds remained mostly higher Thursday with oil prices mixed after Wednesday’s slide.

Brent crude futures for December deliveries were down 26 cents at $84.32.

West Texas Intermediate crude oil benchmark futures for December deliveries settled up 15 cents to $82.81 a barrel after dropping $1.99 the prior day.

Transocean Ltd.’s notes were mixed but mostly softer.

Market tone tone remained strong despite weaker economic data.

The iShares iBoxx High Yield Corporate Bond ETF was up 22 cents to $87.16 by the close.

The Bureau of Economic Analysis’ third-quarter Gross Domestic Product report on Thursday showed the economy expanded at an annualized pace of 2%, slower than the 2.6% rate market analysts expected and down from the 6.7% increase seen in the second quarter.

“The numbers are telling people this transitory inflation the Fed has been trying to sell the last six months is not really going to be a transitory situation,” a source said. “You’re seeing that money pour into equities the last couple of days. Treasuries are selling off.”

In other distressed secondary bond action, Diamond Sports Group LLC’s 6 5/8% senior notes due 2027 ended the day down 1¼ points.

PBF bonds rally

PBF Energy’s paper was among the most active issues in the junk space Thursday with the notes up about 1½ points to 1¾ points after the petroleum refiner posted a third-quarter profit, sources said.

PBF Holding Co. LLC’s 6% senior notes due 2028 (Caa1/B/B+) climbed about 1½ points to 73½ bid on more than $25 million of notes traded.

The Parsippany, N.J.-based issuer’s 7¼% senior notes due 2025 (Caa1/B/B+) rose 1½ points to 78½ bid on over $28 million of secondary volume Thursday.

Also, PBF’s 9¼% senior secured notes due 2025 (Ba3/BB/BB) added 1¾ points to hit 98¾ bid on over $21 million of supply.

PBF Energy reported $78.8 million of net income for the period, up from a loss of $397.8 million in the same period last year.

Nine Energy better

Nine Energy Service’s 8¾% notes due 2023 (Caa2/D) were up over 2¾ points in light activity Thursday, a source said.

The bonds went out trading better than 52¼ bid.

The Houston-based oilfield services company is scheduled to release its third-quarter earnings results in the week ahead on Nov. 4.

Transocean mostly soft

Transocean’s 7.45% notes due 2027 (C/CCC-) saw a gain of 1½ points to head out at 71½ bid in thin secondary supply Thursday, a source said.

Meanwhile, the 6.8% notes due 2038 (C/CCC) dropped 2½ points to 59 bid in trading totaling over $2.6 million.

Transocean’s 7¼% senior notes due 2025 (Ca/CCC+) also went out over 1½ points weaker near the 81¾ bid range on supply of under $1 million.

The Vernier, Switzerland-based offshore driller will release its third-quarter earnings report after the market closes on Monday.

Diamond Sports declines

Elsewhere, Diamond Sports’ 6 5/8% senior notes due 2027 (Ca/CC) fell 1¼ points to finish the session at 30 bid, a source said.

Secondary volume totaled $4.25 million.

The notes are down about 2¼ points this week.

Diamond Sports’ bonds have drifted lower since 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.

Sinclair will release its third-quarter results on Wednesday.

Distressed index softens

Distressed index returns have been soft over the front half of the week.

The S&P U.S. High Yield Corporate Distressed Bond Index’s one-day total return declined to minus-0.17% on Wednesday from minus-0.01% and 0.06% on Monday.

Month-to-date total returns declines softened to minus-0.94% from minus-0.77% on Tuesday and the start of the week.

Year-to-date total returns fell to 29% on Wednesday from 29.22% on Tuesday and 29.23% on Monday.

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