Distressed energy paper up as oil soars; Transocean, PBF bonds gain; Endo declines

By Cristal Cody

Tupelo, Miss., March 4 – Distressed energy bonds stood out on Friday as oil continued to soar headed into the second weekend of Russia’s invasion of Ukraine.

West Texas Intermediate crude oil benchmark futures for April deliveries jumped $8.01 to settle the day at $115.68 a barrel.

On Monday, WTI futures opened at $91.59.

“We’re seeing about 1½ points better on the high-yield energy side,” a trader said. “Bids aren’t really that aggressive for high-yield energy or distressed like they were the past few days, but still with energy rolling up, we’re still going to see some trail up.”

Market tone was soft with stock indices down following Russia’s capture of a nuclear facility in Ukraine and distressed bond volume heavier in emerging markets issues.

The iShares iBoxx High Yield Corporate Bond ETF dropped 54 cents to end at $82.54.

The Chicago Board Options Exchange’s CBOE Volatility index was ending the session up 4.92% to 31.98.

Not a “lot of movement” was seen in the distressed market over the day, a source said.

“It’s been so EM-focused with Russia,” the market source said. “Not so much on the distressed side. Transocean, PBF was up a little bit. Energy has been going crazy.”

Transocean Inc.’s paper improved about 1½ points to over 2 points with the offshore driller’s 8% debentures due 2027 (Ca/CCC+) among the most active distressed issues on Friday, a source said.

PBF Energy Inc.’s notes rallied over 2 points over the day.

Elsewhere, Endo International plc’s paper softened about ½ point to ¾ point with the bonds remaining strongly traded following the company’s soft profit report on Monday and after a settlement with Purdue Pharma owners to resolve opioid-related claims was released on Thursday.

Endo’s notes were ending the week down about 2 points to 3 points.

Transocean climbs

Transocean’s 8% debentures due 2027 (Ca/CCC+) rose nearly 2 points on $13.85 million of secondary volume on Friday, a source said.

The issue was quoted at 78 7/8 bid.

Transocean’s 6.8% senior notes due 2038 (C/CCC) also climbed about 1½ points to 61½ bid on $10.5 million of paper traded.

The Vernier, Switzerland-based offshore driller’s 7½% senior notes due 2026 (Ca/CCC) traded 2¼ points better at the 80¼ bid area on lighter supply of $1.9 million during the session.

Transocean’s 7½% senior notes due 2026 (Ca/CCC) also were quoted up 1¼ points to 81¼ bid by the day’s close.

PBF notes higher

Parsippany, N.J.-based petroleum refiner PBF Energy’s paper also rallied along with oil, a source said.

PBF’s 7¼% senior notes due 2025 (Caa1/B/B-) traded over 2 points better at the 87½ bid area on more than $6 million of secondary activity on Friday.

The company’s 6% senior notes due 2028 (Caa1/B/B-) headed out up 2 1/8 points at 77 bid on $3.2 million of volume.

Endo notes soften

In other distressed issues, Endo Finance LLC’s 6% senior notes due 2028 (Caa3/CCC-) were last seen Friday down about ¾ point at 63¼ bid, a source said.

The issue had improved about 1¼ points to 64 bid in the prior session.

The unsecured notes were about 3 points lower on the week.

Endo’s 9½% senior secured notes due 2027 (Caa2/CCC+) fell over ½ point to 95½ bid in strong trading totaling nearly $13 million on Friday.

The Dublin-based pharmaceuticals maker’s secured issue was around 2 points softer on the week.

Distressed returns positive

The S&P U.S. High Yield Corporate Distressed Bond index one-day total return softened on Thursday but remained positive at 0.19%, compared to 0.23% on Wednesday, minus 1.04% on Tuesday and 0.07% on Monday.

Month-to-date total returns improved to minus 0.63% from minus 0.81% on Wednesday, minus 0.97% on Tuesday and minus 1.85% at the start of the week.

Year-to-date index returns were minus 3.95% on Thursday, minus 4.13% on Wednesday, minus 4.36% on Tuesday and minus 3.35% on Monday.

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