Talen paper higher; Ruby Pipeline declines post-default; March distressed returns negative

By Cristal Cody

Tupelo, Miss., April 4 – Talen Energy Supply LLC’s bonds continued to trade heavily from the get-go Monday after more than $100 million of the company’s notes changed hands Friday on talk of a potential restructuring.

The bonds were about 4 points to 5½ points higher Monday following the utility company’s announcement of a new board member.

Stocks revved up during the session along with oil as market volatility declined.

The iShares iBoxx High Yield Corporate Bond ETF closed up 62 cents to $82.57.

The Chicago Board Options Exchange’s CBOE Volatility Index fell 5.4% to 18.57.

West Texas Intermediate crude oil benchmark futures for May delivery settled $4.01 higher to $103.28.

In other distressed secondary action, Ruby Pipeline LLC’s 8% senior notes due April 1, 2022 (D/CC) traded over 10 points lower Monday after the company defaulted on the issue Friday.

Talen moves up

Talen’s senior notes climbed about 4 points to 5½ points during the session with the 2025 issue heavily traded, a source said.

Talen’s 6½% senior notes due 2025 (Caa2/CCC/CCC) jumped 5½ points by the close with the notes last seen at 29 bid.

The issue went out Friday 1 point better at 23½ bid after sliding 6¾ points on Thursday.

Talen’s 10½% senior notes due 2026 (Caa2/CCC/CCC) also rose 4 points to a print of 27.83 bid in light trading Monday.

The notes were over 2 points weaker going into the weekend after dropping 4 points in Thursday’s session.

The Woodlands, Tex. and Allentown, Pa.-based power generation and infrastructure company’s credit default swaps spreads have widened over 11,700 basis points since mid-February with the company’s CDS spreads ending the prior week at 15,906 bps.

Talen announced on Monday that Gary Wojtaszek, former chief executive officer of CyrusOne Inc., a data center technology real estate investment trust that was sold for $15 billion and taken private by investment firms KKR and Global Infrastructure Partners in March, has joined Talen’s board as an independent director.

Ruby Pipeline softens

Also Monday, Ruby Pipeline’s 8% senior notes due April 1, 2022 (D/CC) traded over 10 points lower in the first session after the company defaulted on the issue Friday, a market source said.

The notes were moving at 82¼ bid to 82½ bid Monday.

The company’s bonds were last active in the secondary market in mid-March at 92¾ bid.

Ruby Pipeline was downgraded Friday by Moody’s Investors Service, S&P Global Ratings and Fitch Ratings after it filed for Chapter 11 bankruptcy on Thursday and missed the $475 million principal payment on the notes.

“The company sought Chapter 11 protection in Delaware following broken down restructuring talks with lenders prior to the maturity date,” Fitch said in a report released Monday.

Ruby Pipeline is a 680-mile natural gas pipeline owned by Kinder Morgan, Inc. and Pembina Pipeline Corp.

One-day total return zero

The S&P U.S. High Yield Corporate Distressed Bond Index one-day total return was zero at the start of April on Friday.

Month-to-date total returns for March finished at negative-2.04%.

Year-to-date index returns through Friday were negative-5.31%, improved from negative-5.32% on Thursday.

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