Diamond Sports, TPC notes decline; Shelf Drilling softens; Evergrande quiet; Kaisa gains

By Cristal Cody

Tupelo, Miss., Nov. 18 – Diamond Sports Group LLC’s paper fell another 2¾ points to 3 7/8 points in heavy secondary trading on Thursday, going out over 10 points lower week to date.

TPC Group Inc.’s 10½% senior secured notes due 2024 (Caa2/CCC-/B-) also sank another 5 points during the session with the notes losing over 20 points since last week.

Market tone was mixed on Thursday.

The iShares iBoxx High Yield Corporate Bond ETF fell 7 cents to $86.63.

Oil prices improved after falling about $2 in the prior session.

West Texas Intermediate crude oil benchmark futures for December deliveries rose 65 cents to settle at $79.01 a barrel.

United Arab Emirates-based Shelf Drilling Holdings Ltd.’s 8¼% senior notes due 2025 (Caa3/CCC+) traded over 1½ points weaker at the 75¼ bid range on $4 million of volume on Thursday, a source said.

In other distressed activity, China Evergrande Group’s bonds were quiet after the company reported it will sell its stake in film producer and streaming services firm Hengten Network Group as the property developer works to stave off bond defaults.

“We still believe an Evergrande default is highly likely,” S&P Global Ratings said in a report on Thursday. “While the issuer has managed to cover recent coupon payments, the bigger test will be in March and April 2022.”

Evergrande has $3.5 billion of senior notes due next year.

Defaults for Chinese developers are expected to increase over the next six to 12 months, S&P said.

Currently, Fantasia Holdings Group Co. Ltd., Sinic Holdings (Group) Co. Ltd., China Properties Group Ltd. and Modern Land (China) Co. Ltd. have missed bond payments.

“We recently downgraded Kaisa Group Holdings Ltd. and Fujian Yango Group Co. Ltd. to CCC- citing an ‘inevitable’ default scenario, and we have similar expectations for Evergrande, which has more than US$300 billion in liabilities,” S&P said.

China Evergrande’s dollar bonds were not seen in the secondary market on Thursday.

Kaisa Group’s 9 3/8% senior notes due 2024 (C//CCC-) improved 2 points over the day and are trading about 10 points higher from the prior week.

Diamond Sports declines

Diamond Sports’ paper extended declines on Thursday, going out 2¾ points to 3 7/8 points weaker, according to a market source.

The company’s 5 3/8% senior secured notes due 2026 (Caa1/CCC) dove 3 7/8 points to trade at 46¼ bid on $22.75 million of secondary volume.

The notes declined over 5 points on Monday, fell 1½ points on Tuesday and were flat to about ¼ point lower on Wednesday.

Diamond Sports’ 6 5/8% senior notes due 2027 (Ca/CC) declined 2¾ points on over $16 million of supply to head out at 22½ bid by the close.

The notes dropped about 6¼ points on Monday, softened about 1¼ points on Tuesday and dipped ½ point on Wednesday.

The bonds have erased gains made in the prior week after the Chesapeake, Va.-based sports broadcast group’s parent Sinclair Broadcast Group Inc. announced it had purchased $184.4 million of Diamond Sports’ existing accounts receivable securitization facility and increased the facility’s size.

TPC notes slide

TPC Group’s 10½% senior secured notes due 2024 (Caa2/CCC-/B-) fell another 5 points to hit 67½ bid over Thursday’s session, a source said.

The issue attracted $5 million of volume.

The notes were down about 3½ points on Monday, off about ¾ point on Tuesday and over 1½ points weaker on Wednesday.

TPC’s notes have slid from trading at the 91 bid range in the prior week.

The Houston-based chemical manufacturer announced its third-quarter earnings results on Friday.

Evergrande not active

China Evergrande’s dollar notes stayed quiet in the secondary space on Thursday, a source said.

Evergrande’s 8¾% senior notes due 2025 (C/C/C) were last seen trading on Tuesday unchanged on the week at 23½ bid.

The Shenzhen, China-based real estate developer said in a notice on the Hong Kong Stock Exchange that it agreed on Wednesday to sell the Hengten shares for HK$2.13 billion and expects to take a loss of HK$8.5 billion from the transaction.

Kaisa notes higher

Kaisa’s 9 3/8% senior notes due 2024 (C//CCC-) headed out 2 points higher at 38½ bid with the paper up about 10 points week to date, a source said.

The company was downgraded on Tuesday by Fitch Ratings following missed interest payments last week on its 11.7% senior notes due 2025 and 11.95% senior notes due 2023.

The Shenzhen, China-based real estate developer also faces $400 million of bonds due in December.

Distressed returns up

Distressed index returns improved over Wednesday’s session.

The S&P U.S. High Yield Corporate Distressed Bond index’s one-day total return rose to 0.03% from minus 0.79% on Tuesday and minus 1.46% on Monday.

Month-to-date total returns were minus 0.85%, compared to minus 0.88% on Tuesday and minus 0.09% at the start of the week.

Year-to-date total returns posted at 27.92% versus 27.89% on Tuesday and 28.91% on Monday.

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