Talen notes tumble; AMC down; Sunac better; Shimao finds footing; Strike loan lower

By Cristal Cody

Tupelo, Miss., Dec. 16 – Talen Energy Supply LLC’s paper tumbled by the finish on Thursday in heavy secondary action.

The bonds rallied early following Talen’s aftermarket release on Wednesday that it closed on an upsized $848 million first-lien revolving credit facility before the paper ended softer on the day.

AMC Entertainment Holdings, Inc.’s secured paper was 1¾ points weaker on Thursday after sliding over 4 points in the prior session.

The general China property space saw improvement over the day, while default fears remained high.

Sunac China Holdings Ltd.’s offshore bonds were up about 2 points.

Bonds from split-rated Shimao Group Holdings Ltd., a Hong Kong-based holding company focused on property management, development and sales, found some footing after sinking in the prior two sessions.

Shimao’s 4¾% notes due 2022 (Ba1/BB/BBB-) climbed nearly 5 points to 64¾ bid on $3.8 million of paper traded, a source said.

The company’s notes plummeted about 8 points to 19 points on Tuesday and sank another 2¼ points on Wednesday.

Overall market tone softened on Thursday with equities weaker following Wednesday’s rally after the Federal Reserve released its monetary policy statement.

The iShares iBoxx High Yield Corporate Bond ETF gave back 6 cents to close at $86.45.

Oil prices climbed over $1.

West Texas Intermediate crude oil benchmark futures for January deliveries settled $1.51 higher at $72.38 a barrel.

Strike declines

In other distressed activity, the $215 million junior term loan from Strike LLC, which filed for Chapter 11 bankruptcy on Dec. 6 to facilitate a restructuring, is trading 10 points lower at around the 80 area, a source said.

The loan was quoted at 90, 92 at the start of December and midweek at 80, 82.

Strike plans to sell all of its assets to stalking horse bidder and majority creditor American Industrial Partners Ltd.

According to a Fitch Ratings note, under the terms of the Nov. 22 restructuring support agreement, the stalking horse bid includes a credit bid of the debtor-in-possession debt, cash to fund the debtors’ wind-down and the assumption of certain liabilities.

American Industrial is the lender on a $112.6 million DIP facility, which includes a $22 million new money tranche A term loan, $4 million of new money tranche B term loan and an $86.6 million senior term loan.

Fitch said the company has $296 million of pre-petition debt comprised of an ABL facility with $51 million outstanding, a $30 million incremental delayed-draw term bridge loan and the $215 million junior term loan.

On Dec. 8, Strike received interim access to $8 million of the $26 million new money portion of the DIP facility, according to an order with the U.S. Bankruptcy Court for the Southern District of Texas.

The Woodlands, Tex.-based full-service pipeline, facilities and energy infrastructure solutions provider, is expected to hold an auction on Jan. 18 for its assets.

A hearing on the proposed bid procedures is scheduled for Dec. 22.

Talen notes lower

Back in the distressed bond space, Talen’s 10½% senior notes due 2026 (Caa1/CCC/B-) jumped 5½ points to as high as 57 bid early Thursday before settling down 2¾ points at 48¾ bid on heavy volume totaling $27.5 million, a source said.

The notes dropped about 2 points on Wednesday.

Talen’s 6½% notes due 2025 (Caa1/CCC/B-) were quoted trading at 43 3/8 bid on over $18.6 million of secondary volume Thursday.

The company’s 6 5/8% senior secured notes due 2028 (B1/B+/B+) rallied 1½ points to 1¾ points at the start of the day before going out about 1 point softer at 88½ bid.

Talen’s paper softened about 1 point to 2 points on Wednesday with market focus on the company’s $114 million outstanding of 4.6% senior notes due Dec. 15, 2021.

On Wednesday, the company announced it closed on an upsized $848 million first-lien revolving credit facility due 2024.

The Woodlands, Tex., and Allentown, Pa.-based company previously announced it planned a $788 million facility commitment led by GoldenTree Asset Management LP and Silver Point Finance, LLC.

Concurrently with the closing, Talen said it has expanded the facility to additional capital partners including Apollo Capital Management LP, Diameter Capital Partners LP and Owl Creek Asset Management, LP.

Proceeds will be used to fund elevated commodity working capital requirements during the winter, repay $238 million of debt under its revolving credit facility and fund up to $200 million for working capital and other general corporate purposes.

On Dec. 6, Fitch Ratings placed the company and its bonds on ratings watch negative, noting the facility will stabilize Talen’s liquidity profile but will adversely affect the ratings of its existing debt.

AMC bonds decline

AMC Entertainment’s paper remained weaker on Thursday after sliding over 4 points on Wednesday, a source said.

The company’s 10% senior secured second-lien notes due 2026 (Ca/CCC-) traded down 1¾ points to 95¼ bid on nearly $14 million of secondary supply.

The issue fell 4 3/8 points on $9 million of secondary action in the previous session.

The Leawood, Kan.-based movie theater owner’s bonds have been soft week to date as trade in the reopening space weakens on the spread of the Omicron variant of Covid-19 and following disclosures last week that insiders sold $10 million of shares.

Sunac paper higher

Sunac’s 7¼% notes due 2022 (B1/B) rose 2 points to 83 bid on $2 million of volume on Thursday, a source said.

The notes dropped 6 points in Wednesday’s session.

The Tianjin, China-based property developer reported in the prior week that it sold $530 million of American Depositary Shares of KE Holdings Inc. to raise funds for general working capital.

Distressed index improves

Distressed index daily returns remained soft on Wednesday but saw improvement from the prior session.

The S&P U.S. High Yield Corporate Distressed Bond index saw one-day total returns were minus 0.21%, compared to minus 0.44% on Tuesday and 0.02% on Monday.

Month-to-date returns softened to 0.94% from 1.15% on Tuesday and 1.59% at the start of the week.

Year-to-date total returns declined to 22.92% from 23.17% on Tuesday and 23.71% on Monday.

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