Transocean bonds gain 2 points as oil prices climb; Talen notes higher; Evergrande up

By Cristal Cody

Tupelo, Miss., March 21 – Market tone softened Monday following a heavy round of quarterly earnings releases with stock indices down across the board.

The iShares iBoxx High Yield Corporate Bond ETF fell 95 cents, or 1.15%, to $81.58.

Oil soared over $7 higher.

West Texas Intermediate crude oil benchmark futures for April deliveries climbed $7.42 to settle Monday at $112.12 a barrel.

Offshore driller Transocean Inc.’s bonds traded about 2 points better by the day’s end.

Talen Energy Supply LLC’s senior notes also were higher on Monday in strong activity after ending the prior week about 4½ points to 8¼ points lower.

Meanwhile, TPC Group Inc.’s 10½% senior secured notes due 2024 (Caa2/D/C) have been thinly traded in the distressed space in March as the company faces a default after missing debt payments in February. TPC reports its fourth-quarter earnings later this week.

In other distressed secondary activity, China Evergrande Group’s dollar bonds rose on Monday following an announcement that trading in its stock was halted on the Hong Kong Stock Exchange.

Issuers including Evergrande, Kaisa Group Holdings Ltd., 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. missed debt payments in 2021.

Transocean rises

Transocean’s 7½% senior notes due 2031 (Ca/CCC) were quoted 2 points higher on Monday at 69 bid on more than $5.5 million of secondary volume, a source said.

The Vernier, Switzerland-based offshore driller’s 6.8% senior notes due 2038 (C/CCC) also were nearly 2 points better at 63½ bid on lighter supply totaling $2.35 million.

Talen bonds up

Talen’s 6½% senior notes due 2025 (Caa2/CCC/CCC) rallied 3 points to 30¼ bid on $9 million of paper traded on Monday, a source said.

The notes were up 1½ points on Friday but about 4½ points lower on the week.

Talen’s 10½% senior notes due 2026 (Caa2/CCC/CCC) picked up 1¼ points to hit 30¼ bid during the session.

Secondary volume totaled $5.2 million.

On Friday, the notes recovered 1¾ points and were ending the week about 8¼ points softer.

Talen’s credit default swap spreads increased over 2,500 basis points in the prior week.

The Woodlands, Tex., and Allentown, Pa.-based power company’s CDS spreads were at 7,717 bps for the week ended Wednesday, according to a Moody’s Investors Service report.

TPC paper quiet

TPC Group’s 10½% senior secured notes due 2024 (Caa2/D/C) have been thinly traded in the distressed space in March, a source reported on Monday.

The notes were last seen trading on March 8 at 51 bid, down 6 points from February and well off the low 90 bid range traded in November.

TPC reported in the prior week that it received an extension until April 18 on a forbearance agreement as the company attempts to stave off a default after missing $53 million of interest payments due Feb. 2 for its 10½% notes and 10 7/8% first-priority lien notes due 2024.

The Houston-based chemical manufacturer plans to release its fourth-quarter earnings results at 1 p.m. ET on Thursday.

Evergrande higher

China Evergrande’s distressed offshore bonds were higher on Monday and trading with handles in the low teens, a source said.

Evergrande’s 8¾% senior notes due 2025 (C//C) were seen as much as 1¼ points better before ending the day up nearly ¾ point at a print of 12.95 on $10.6 million of secondary volume.

The issue ended the prior week about ½ point softer.

Trading was halted on Monday in Evergrande’s Hong Kong Stock Exchange-listed shares and structured products pending an announcement by the Shenzhen, China-based real estate developer.

Evergrande has $3.5 billion of senior notes due in 2022.

Distressed index flat

The S&P U.S. High Yield Corporate Distressed Bond index one-day total return was flat on Friday at 0.55%, compared to 0.55% on Thursday, 0.67% on Wednesday, minus 0.91% on Tuesday and minus 1.07% on March 14.

Month-to-date total returns were better at minus 3.11%, versus minus 3.65% on Thursday, minus 4.18% on Wednesday, minus 4.81% on Tuesday and minus 3.94% at the week’s start.

Year-to-date index returns improved to minus 6.36% from minus 6.87% on Thursday, minus 7.38% on Wednesday, minus 8% on Tuesday and minus 7.15% in the March 14 session.

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