Transocean, PBF, NGL paper up as oil climbs; AMC pulls back; China Evergrande quiet

By Cristal Cody

Tupelo, Miss., Jan. 4 – Energy issuers rallied on Tuesday as oil climbed a second day with paper from Transocean Inc. among the most active distressed names in the secondary market.

Transocean’s paper is trading over 2 points to about 4 points better in 2022.

Bonds from PBF Energy Inc. and NGL Energy Partners LP also gained over the day.

PBF Energy’s notes were seen over ¾ point to 1 5/8 points better.

NGL Energy’s 6 1/8% senior notes due 2025 (Caa1/CCC+) were over 1¼ points stronger.

February and March crude oil prices improved a second day on Tuesday.

West Texas Intermediate crude oil benchmark futures for February deliveries settled 91 cents higher at $76.99 a barrel.

AMC Entertainment Holdings, Inc.’s notes were heavily traded on Tuesday but gave back gains made in the prior session.

AMC’s 10% senior secured second-lien notes due 2026 (Ca/CCC-) fell more than 1¼ points after improving nearly ¾ point in the prior session.

Otherwise, distressed secondary activity remained light in the second session of the year, sources reported.

The junk space saw the year’s first stirrings of primary action over the day, while the investment-grade primary market remained heavy with supply.

Overall market tone was mixed with the Nasdaq erasing Monday’s gains and closing down 1.33%.

The iShares iBoxx High Yield Corporate Bond ETF was soft for a second day and ended Tuesday down 22 cents, or 0.25%, at $86.75.

China Evergrande Group’s dollar notes were quiet to about ½ point better after the company reported it received orders to demolish 39 buildings, and its shares resumed trading on the Hong Kong Stock Exchange.

Transocean rises

Transocean’s notes rallied about ½ point to 2½ points over the session, a source said.

The 7½% notes due 2026 (Ca/CCC+) were quoted nearly 2 points better at just under 79 bid in thin volume and about 4 points higher since the end of 2021.

Transocean’s 11½% senior guaranteed notes due 2027 (Caa3/CCC+) jumped 2½ points to 101½ bid on strong supply of more than $16.3 million on Tuesday.

The Vernier, Switzerland-based offshore driller’s 8% debentures due 2027 (C/CCC) gained over 1 point to trade better than 76 bid on $3.25 million of volume during the session. The issue is about 2½ points better since December.

Transocean’s 7½% senior notes due 2031 (Ca/CCC) also improved ¼ point to 61¼ bid by the close after trading as high as 61¾ bid earlier in the day.

The 2031 issue rose more than 1¾ points on Monday and is trading about 2¼ points stronger year to date.

PBF notes improve

PBF Energy’s notes improved over ¾ point to 1 5/8 points as other bonds in the space climbed, a source said.

PBF’s 6% senior notes due 2028 (Caa1/B/B+) rose 1 5/8 points to 68 bid on $10.25 million of trading activity on Tuesday.

The Parsippany, N.J.-based petroleum refiner’s 9¼% senior secured notes due 2025 (Ba3/BB/BB) also were over ¾ point better at 96¾ bid on $5 million of secondary supply.

NGL trades higher

NGL Energy Partners’ 6 1/8% senior notes due 2025 (Caa1/CCC+) traded over 1¼ points stronger at 88 bid by the close on Tuesday, a market source said.

Volume totaled $1.8 million.

The Tulsa, Okla.-based diversified midstream services provider’s notes were last seen on Dec. 31 at the 89 bid range.

AMC declines

AMC’s 10% senior secured second-lien notes due 2026 (Ca/CCC-) fell 1.325 points to head out at 98½ bid and yielding over 10% on Tuesday, a source said.

The paper moved on $20 million of secondary volume.

The Leawood, Kan.-based movie theater owner’s issue had gained nearly ¾ point in the prior session on $23.25 million of trading supply.

Evergrande edges up

Evergrande’s 8¾% senior notes due 2025 (C/C/C) rose nearly ½ point to 13½ bid in thin activity on Tuesday, according to a market source.

The notes have declined about 6¾ points since December and about 70 points since May.

Evergrande’s shares resumed trading on Tuesday afternoon on the Hong Kong Stock Exchange after activity was halted Monday ahead of the company’s announcement.

Evergrande reported in a regulatory filing on Tuesday that it received an order on Dec. 30 by the Danzhou Comprehensive Administrative Law Enforcement Bureau for demolition of 39 buildings on its Ocean Flower Island project in China.

The decision does not involve other plots of land on the island project, according to the filing.

Evergrande said that in regard to its “current liquidity situation, the company will continue to actively maintain communication with creditors, strive to resolve risks and safeguard the legitimate rights and interests of all parties.”

Fitch Ratings and S&P Global Ratings dropped the Shenzhen, China-based real estate developer to default status in December following the end of grace periods on missed coupon payments.

China’s property developer space is expected by market analysts to see heavy defaults in 2022 that are forecast to climb as high as 65%.

The market experienced numerous defaults late in 2021 from issuers including Evergrande, Kaisa Group Holdings Ltd.’s Fantasia Holdings Group Co. Ltd., Sinic Holdings (Group) Co. Ltd., China Properties Group Ltd., Modern Land (China) Co. Ltd. and Sunshine 100 China Holdings Ltd.

Distressed index gains

Distressed index returns saw a one-day gain in the first session of 2022.

The S&P U.S. High Yield Corporate Distressed Bond index’s one-day total return on Monday was 0.38%.

Index returns were up from minus 1.12% on Friday.

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