Transocean, PBF higher; Summit Midstream up; Talen Energy, Rite Aid CDS spreads widen

By Cristal Cody

Tupelo, Miss., March 7 – Energy paper in the distressed space continued to gain on Monday as WTI benchmark crude oil hit nearly $120 per barrel during the session.

Transocean Inc.’s bonds rallied about 1¼ points to 3 points in heavy trading.

PBF Energy Inc.’s notes improved about 1 point during the session.

West Texas Intermediate crude oil benchmark futures for April deliveries settled up $3.72 to $119.40 a barrel on Monday, compared to $91.59 a barrel a week ago.

Market tone remained soft during the session as stock indices slid over 2% and volatility was high headed into a third week of Russia’s invasion of Ukraine.

The iShares iBoxx High Yield Corporate Bond ETF finished down 72 cents at $81.82.

The Chicago Board Options Exchange’s CBOE Volatility index rose over 13% to 36.27 by the session’s close.

In other secondary trading, Summit Midstream Holdings LLC’s 5¾% senior notes due 2025 (Caa2/B-) recovered about ¾ point by Monday afternoon after shedding 4¾ points on Friday.

The bonds went out Friday nearly 10 points lower on the week.

Talen Energy Supply LLC’s paper was quiet on Monday after ending the prior week unchanged to softer, while its credit default swaps spreads have increased more than 550 basis points over the past two weeks.

Rite Aid Corp. is another Caa2-rated company with wider CDS spreads for the past two consecutive weeks, according to a report from Moody’s Investors Service.

Rite Aid’s CDS spreads increased 41 bps to 1,233 bps for the week ended March 2, following a bump of 46 bps in the prior week ended Feb. 16.

The Camp Hill, Pa.-based drugstore company’s 7.7% senior debentures due 2027 (Caa2/CCC/CCC) were about ¼ point to ½ point softer on Monday at the 82 bid range, a source said.

Meanwhile, Nabors Industries, Inc.’s CDS spreads decreased 59 bps to 571 bps for the week ended March 2 after increasing 38 bps in the prior week, according to the Moody’s report.

Nabors Industries’ 5¾% senior notes due 2025 (Caa2/CCC/CCC-) traded about ¼ point higher on Monday at 98½ bid, a source said.

The Bermuda- and Houston-based oil and gas drilling contractor’s notes ended the prior week about 2 points higher.

Transocean bonds higher

Transocean’s 11½% senior guaranteed notes due 2027 (Caa3/CCC+) picked up 1¾ points in heavy trading on Monday to head out at 103½ bid, a market source said.

The issue attracted $19.5 million of secondary volume.

Transocean’s 8% debentures due 2027 (Ca/CCC+) added 2 1/8 points to hit 81 bid on $9.7 million of paper traded over the day.

The Vernier, Switzerland-based offshore driller’s 6.8% senior notes due 2038 (C/CCC) also went out 2¾ points higher in the 63 bid area on over $7 million of volume Monday.

PBF paper improves

Elsewhere in the energy space, PBF Energy’s 6% senior notes due 2028 (Caa1/B/B-) gained 1 point to trade at 78 bid by the close on Monday on $7.5 million of secondary supply, a source said.

The Parsippany, N.J.-based petroleum refiner’s 9¼% senior secured notes due 2025 (Ba3/BB/BB) also traded about 1 point better at 103 bid on lighter volume totaling $2.25 million.

Summit Midstream up

Summit Midstream Holdings’ 5¾% senior notes due 2025 (Caa2/B-) traded about ¾ point higher on Monday at the 80 bid area after ending the prior week over 9½ points softer, a market source said.

The notes slid 4¾ points on Friday to 79¼ bid.

In February, Summit Midstream Partners, LP announced a fourth-quarter loss and provided adjusted 2022 EBITDA guidance.

The Woodlands, Tex.-based midstream energy company reported a limited amount of new wells in 2022.

Talen flat

Talen’s notes ended the prior week unchanged to softer while its CDS spreads have widened over the past two weeks, according to a market source and a Moody’s report.

Talen’s 10½% senior notes due 2026 (Caa2/CCC/CCC) were last seen active on Friday at 43 bid, down ¾ point on the day and about 2 points lower on the week.

The company’s 6 5/8% senior secured notes due 2028 (B1/B/B) last traded on Friday in thin supply near the 88 bid range, mostly unchanged on the day and week.

Talen’s CDS spreads increased 300 bps to 4,721 bps in the week ended March 2 after rising 253 bps in the week ended Feb. 16.

The Woodlands, Tex., and Allentown, Pa.-based company reported on Feb. 24 that it was named to Forbes’ list of America’s Best Mid-Size Employers for 2022 for the second consecutive year.

Distressed index down

The S&P U.S. High Yield Corporate Distressed Bond index one-day total return ended Friday at minus 0.41%, down from 0.19% on Thursday, 0.23% on Wednesday, minus 1.04% on Tuesday and 0.07% at the week’s start.

Month-to-date total returns were minus 1.03% on Friday, minus 0.63% on Thursday, minus 0.81% on Wednesday, minus 0.97% on Tuesday and minus 1.85% in the week’s start.

Year-to-date index returns ended the prior week at minus 4.34% on Friday, compared to minus 3.95% on Thursday, minus 4.13% on Wednesday, minus 4.36% on Tuesday and minus 3.35% in the Feb. 28 session.

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