China Evergrande perks up; Kaisa unchanged; Diamond Sports weaker; PBF notes pull back

By Cristal Cody

Tupelo, Miss., Oct. 29 – China Evergrande Group’s offshore bonds climbed in secondary trading on Friday after the real estate developer avoided a default with a second overdue bond payment.

Evergrande’s 8¾% senior notes due 2025 (C/C/C) climbed 2½ points and were going out about 3 points better on the week.

Kaisa Group Holdings Ltd.’s bonds traded mostly flat following a third downgrade this week on refinancing risks.

The space has steadily weakened following China Evergrande’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.

In other distressed bonds, Diamond Sports Group LLC’s paper traded flat to weaker on Friday with the secured and unsecured notes ending the week about 1 1/8 points to 2¼ points softer.

Diamond Sports’ notes have dropped over 10 points since the end of September.

PBF Energy Inc.’s bonds pulled back slightly after rallying about 1½ points to 1¾ points the previous day on a strong third-quarter earnings report. The notes were trading flat to about ½ point weaker on Friday.

Oil was unchanged to better on the day.

West Texas Intermediate crude oil benchmark futures for December deliveries settled 76 cents higher at $83.57 a barrel.

Market tone was mixed with early pressure on the tech sector following soft earnings reports.

The iShares iBoxx High Yield Corporate Bond ETF fell 23 cents to $86.93 by the close.

The distressed space is getting narrower, market sources said.

One source this week noted there’s “not a lot of distressed left, period.”

On Friday, BofA Securities Inc. analysts reported in a note that “October appears to be another default-free month.”

Evergrande higher

China Evergrande’s 8¾% senior notes due 2025 (C/C/C) climbed 2½ points to 25½ bid in strong trading on Friday, a source said.

The issue is about 3 points better on the week.

The Shenzhen, China-based real estate developer’s paper improved on reports Evergrande made a second bond payment that staves off a default following a missed note payment in September.

Kaisa treads water

Kaisa Group’s bonds held mostly steady on Friday, a source said.

The Shenzhen, China-based real estate developer’s 10 7/8% senior notes due 2023 (Caa2//CCC+) were unchanged on the day at 31 bid but going out nearly 15 points lower from the prior week.

Moody’s Investors Service dropped the company’s senior notes to Caa2 from B3.

Kaisa also was downgraded on Wednesday by S&P Global Ratings and Fitch Ratings over its ability to refinance upcoming dollar bond maturities, including $400 million of dollar notes due Dec. 7, S&P said.

Diamond Sports declines

Diamond Sports’ 5 3/8% senior secured notes due 2026 (Caa1/CCC) fell 1 point to 56½ bid over Friday’s session, a source said.

The notes were 1 1/8 points softer on the week and over 10 points weaker from where the issue ended September.

Diamond Sports’ 6 5/8% senior notes due 2027 (Ca/CC) were seen mostly unchanged at 30 bid by late afternoon.

The unsecured notes are trading about 2¼ points softer from a week ago and about 13½ points weaker since the close of September.

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.

Coming up next week, Sinclair will release its third-quarter results on Wednesday.

PBF bonds rally

PBF Energy’s paper pulled back slightly on Friday following a gain of 1½ points to 1¾ points the previous day on a strong third-quarter profit report, a source said.

PBF Holding Co. LLC’s 6% senior notes due 2028 (Caa1/B/B+) shed ½ point to 73 bid in light trading after climbing about 1½ points on Thursday.

The notes are about 2 points stronger on the week.

The Parsippany, N.J.-based issuer’s 7¼% senior notes due 2025 (Caa1/B/B+) saw strong secondary action during the session but went out mostly unchanged at 78½ bid.

The issue picked up 1½ points on Thursday.

Distressed index higher

Distressed index returns improved on Thursday after softening in the front half of the week.

The S&P U.S. High Yield Corporate Distressed Bond index’s one-day total return rose to 0.22% versus minus 0.17% on Wednesday, minus 0.01% on Tuesday and 0.06% on Monday.

The index’s month-to-date total return improved to minus 0.73% from minus 0.94% on Wednesday, minus 0.77% on Tuesday and minus 0.77% on Monday.

Year-to-date total returns edged up to 29.28%, compared to 29% on Wednesday, 29.22% on Tuesday and 29.23% on Monday.

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