Diamond Sports edges lower; TPC notes quiet; Transocean drops as oil gives back gains

By Cristal Cody

Tupelo, Miss., March 14 – In the distressed secondary market on Monday, Diamond Sports Group LLC’s notes traded about 3/8 point to ½ point weaker after ending the prior week down about 1/8 point to 1¼ points.

Diamond Sports’ recently completed distressed debt exchange “is the largest default since June 2020 when Chesapeake Energy filed,” according to a March 10 Fitch Ratings news release.

TPC Group Inc.’s 10½% senior secured notes due 2024 (Caa2/D/C) were quiet on Monday and have been thinly traded so far in March as the company faces a March 18 end to a forbearance on a missed payment.

The latest 2022 global corporate default tally rose to 11 following the “addition of one confidential default,” S&P Global Ratings said in a report on Monday.

The U.S. space leads the year-to-date tally with six defaults, but the total remains 54% lower than 2021 levels, S&P said.

The U.S. speculative-grade corporate default rate is forecast to reach 3% by December as weaker lending conditions could eventually strain some low-rated issuers, according to S&P.

Moody’s Investors Service notes the global speculative-grade default rate edged up to 1.8% from 1.7% for the trailing 12 months ended in January, well below the 6.9% peak rate at the end of 2020 and the pre-pandemic rate of 3.3%.

The financial markets were mostly softer on Monday as Russia continued a third week of its assault against Ukraine and as focus shifts to the Federal Reserve’s monetary policy announcement and widely expected rate hike on Wednesday.

The iShares iBoxx High Yield Corporate Bond ETF dropped 96 cents, or 1.19%, to $79.97 by the session’s close.

Oil erased gains from Friday.

West Texas Intermediate crude oil benchmark futures for April deliveries declined $6.32 to settle at $103.01 a barrel.

Transocean Inc.’s distressed notes slid about 1¾ points to over 3 points.

Talen Energy Supply LLC’s 7¼% senior secured notes due 2027 (B1/B) declined over 1 point in strong trading on Monday.

The company’s credit default swaps spreads have widened to over 5,200 basis points after increasing 480 bps in the prior week.

Diamond Sports dips

Diamond Sports’ 5 3/8% second-lien secured notes due 2026 (Caa3/CC) dipped 3/8 point to 40½ bid, a market source said.

The issue went out on Friday about 1/8 point lower on the week.

Diamond Sports’ 6 5/8% senior notes due 2027 (Ca/CC) also headed out about ½ point lower on Monday at 22 bid.

The notes were down about 1¼ points over the prior week.

Diamond Sports’ parent, Sinclair Broadcast Group Inc., announced on March 1 the Chesapeake, Va.-based sports broadcast group completed its new money financing transaction and debt exchange of term loans and notes, which included exchanging the 5 3/8% notes for its 5 3/8% senior secured notes due 2026.

TPC notes muted

TPC Group’s 10½% senior secured notes due 2024 (Caa2/D/C) were last seen in the secondary market in thin trading in the prior week at 51 bid, a source said.

The bonds have declined from the 73 bid range at the start of the year.

TPC reported in February that the company is in forbearance until March 18 after it missed about $53 million of coupon payments that were due Feb. 1 on its 10½% first-priority lien notes and 10 7/8% first-priority lien notes due 2024.

The Houston-based chemical manufacturer entered into the forbearance agreement with Ad Hoc Group Ltd., which is providing it with $52 million of liquidity through a commitment to purchase additional senior secured priming notes due 2024.

Transocean lower

Transocean’s 7½% senior notes due 2026 (Ca/CCC) dropped about 3½ points on Monday to 79¼ bid by the day’s end, a market source said.

Transocean’s 8% debentures due 2027 (Ca/CCC+) were down about 2 points in light trading at 78 bid.

The Vernier, Switzerland-based offshore driller’s 6.8% senior notes due 2038 (C/CCC) were quoted trading Monday afternoon in strong volume totaling over $13 million at 61½ bid, 1¾ points weaker on the day.

Talen notes, CDS soften

Also in the energy space, Talen’s 7¼% senior secured notes due 2027 (B1/B) dropped over 1 point to trade over the 88½ bid area on Monday, a source said.

Trading was active with $14 million of volume.

The Woodlands, Tex., and Allentown, Pa.-based company’s credit default swaps spreads ended March 9 480 bps wider at 5,201 bps, according to a Moody’s report.

Talen’s CDS spreads had increased 300 bps in the week ended March 2 and rose 253 bps in the week ended Feb. 16.

Distressed returns slide

The S&P U.S. High Yield Corporate Distressed Bond index one-day total return remained weak on Friday at minus 0.43%.

One-day returns totaled minus 0.72% on Thursday, 0.05% on Wednesday, minus 0.59% on Tuesday and minus 0.2% on March 7.

Month-to-date total returns declined on Friday to minus 2.9%, compared to minus 2.48% on Thursday, minus 1.76% on Wednesday, minus 1.81% on Tuesday and minus 1.23% at the week’s start.

Year-to-date index returns widened to minus 6.15% from minus 5.74% on Thursday, minus 5.05% on Wednesday, minus 5.1% on Tuesday and minus 4.54% in the March 7 session.

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