Talen bonds slide on financing deal; Transocean, Nabors off; PBF higher; Nugget ‘busy’

By Cristal Cody

Tupelo, Miss., Dec. 2 – Talen Energy Supply LLC’s distressed junk bonds slid about 2 points to over 7 points on Thursday following the announcement of a new financing commitment.

Talen’s bonds were heavily traded over the session with the issuer’s notes posting as the “fourth one in volume,” a source said.

Paper from offshore driller Transocean Inc. and oil and gas drilling contractor Nabors Industries Inc. saw declines during the session, while Petroleum refiner PBF Energy Inc.’s notes were up.

“Oil, energy was up actually today,” a source said. “It bounced back a little bit. Natural gas was down.”

Oil prices improved nearly $1 over the day.

West Texas Intermediate crude oil benchmark futures for January deliveries rose 93 cents to settle at $66.50 a barrel.

“The high-yield market was not great in the morning and it just got stronger,” a source said. “The HYG is up 63 cents, so the market bounced back. The equity market ended up rallying.”

The iShares iBoxx High Yield Corporate Bond ETF closed up 63 cents to $86.00.

Volatility was lower by the close with the Chicago Board Options Exchange’s CBOE Volatility index down over 10% at $27.95 after climbing 14.45% on Wednesday and 20.34% on Tuesday.

Elsewhere in the secondary market, Golden Nugget Inc.’s 6¾% senior notes due 2024 (Caa2/CCC) shed about ½ point to trade under par on $37.5 million of volume on Thursday after a regulatory filing from Fast Acquisition Corp. reported parent Fertitta Entertainment, Inc. is trying to pull the plug on its merger.

“Nugget was very busy,” a source said. “They were expecting the bonds to be taken out.”

Fast Acquisition said on Thursday in the 8-K filing with the Securities and Exchange Commission that Fertitta does not have the right to terminate the merger agreement. The deal was expected to take the Houston-based restaurant and gaming operator public.

Talen notes drop

Talen Energy’s paper plummeted over the session by about 2 points to over 7 points following the company’s announcement of a new first-lien facility, a source said.

Talen’s 10½% senior notes due 2026 (Caa1/CCC/B-) dropped 5¼ points to 58¾ bid on over $25 million of volume.

The 7¼% senior secured notes due 2027 (Ba3/BB-/BB-) shed over 2 points to head out under the 92 bid area on nearly $18 million of supply.

Talen’s 6½% senior notes due 2025 (Caa1/CCC/B-) sank 7 3/8 points to 54 5/8 bid on over $8 million of paper traded on Thursday.

The Woodlands, Tex., and Allentown, Pa.-based power company announced that it obtained a financing commitment led by GoldenTree Asset Management LP and Silver Point Finance, LLC for a new $788 million first-lien facility due in September 2024.

Closing is expected in mid-December but is subject to a majority vote of lenders under the company’s existing revolving credit facility, along with other conditions.

Talen said proceeds will be used to fund elevated commodity working capital requirements during the winter and to repay $238 million of debt outstanding under its existing revolver.

Talen also held its third-quarter conference call on Thursday.

Transocean, Nabors slip

Transocean’s 7½% notes due 2031 (C/CCC/) fell more than 1¾ points to trade under the 54½ bid range over the day, a source said.

The Vernier, Switzerland-based offshore driller’s issue saw $1.4 million of secondary volume.

Nabors Industries’ 7½% senior notes due 2028 (Caa1/CCC-) were down 2 points at 83 bid.

Volume in the Bermuda- and Houston-based oil and gas drilling contractor’s notes totaled about $1.5 million Thursday.

PBF bonds rally

Petroleum refiner PBF Energy’s 7¼% senior notes due 2025 (Caa1/B/B+) traded more than 2¼ points better on the day at nearly 71 bid, according to a market source.

The Parsippany, N.J.-based company’s notes saw more than $9.7 million of volume during the session.

Distressed returns jump

Distressed index returns climbed on Wednesday, according to the latest data available.

The S&P U.S. High Yield Corporate Distressed Bond index’s one-day total return hit 1%, compared to minus 0.65% on Tuesday and minus 0.15% on Monday.

So far in the fourth quarter, returns total minus 5.56%.

Year-to-date total returns improved on Wednesday to 22.99% from 21.77% on Tuesday and 22.57% on Monday.

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