Distressed energy paper under pressure; Transocean, Telesat notes lower; TransDigm down

By Cristal Cody

Tupelo, Miss., April 25 – Distressed energy paper dove along with oil prices on Monday while the financial markets overall headed higher.

“It seems to be moving up, worried about what’s going on,” a source said. “I’ve seen a lot of OWICs today. The CDX is up.”

The iShares iBoxx High Yield Corporate Bond ETF climbed 67 cents to $79.93.

Stocks also rose following the news that Elon Musk’s offer to buy Twitter Inc. for $44 billion and take the company private was accepted.

Volatility was down over 4% after heading out Friday over 23% higher.

The Chicago Board Options Exchange’s CBOE Volatility index dropped 4.22% to 27.02.

Oil prices were off about $3 to $4.

West Texas Intermediate crude oil benchmark futures for June delivery declined $3.53 to settle below $100 at $98.54 a barrel.

“Energy was down a point, point and a half,” a source said.

Transocean Inc.’s notes softened about 1 point to 1¼ points in light trading on Monday.

The offshore driller’s 6.8% senior notes due 2038 (C/CCC) fell 1 point to 63 bid on $2 million of volume, a market source said.

In other distressed issues, Telesat Corp.’s 6½% senior notes due 2027 (Caa2/CCC+) softened about 1¼ points to 1½ points over the session.

Meanwhile, TransDigm Group Inc.’s notes have been under pressure in April with the 5½% senior subordinated notes due 2027 (B3/B-) down about 6 points this month.

The company’s notes were trading mostly about 1/8 point to over ½ point lower on the day on more than $46 million of secondary activity.

Telesat trades down

Telesat Canada LLC’s 6½% senior notes due 2027 (Caa2/CCC+) traded down about 1¼ points to 1½ points over the afternoon.

“Not much trading today,” a source said of the company’s paper. “A lot of odd lots.”

The senior notes were last seen down 1¼ points at 44¼ bid on $6 million of volume on Monday.

The notes have dropped about 2¼ points since Wednesday.

The Ottawa-based satellite communications company was downgraded by Moody’s Investors Service at the start of the month and by S&P Global Ratings in March.

TransDigm lower

TransDigm’s 5½% senior subordinated notes due 2027 (B3/B-) fell over ½ point on Monday on active trading of about $12.28 million, sources said.

The notes were quoted at the 93 bid area and yielding over 7%.

The Cleveland-based aerospace manufacturer’s 4 7/8% senior subordinated notes due 2029 (B3/B-) also traded down around 1/8 point to 87¾ bid and yielding 7 1/8% on about $6.5 million of secondary action during the session.

Distressed index down

The S&P U.S. High Yield Corporate Distressed Bond index one-day total return declined to minus 0.39% on Friday from 0.11% on Thursday, 0.16% on Wednesday, zero on Tuesday and 0.44% at the start of the week.

Month-to-date total return softened to minus 1.48%, compared to minus 1.1% on Thursday, minus 1.21% on Wednesday and minus 1.37% in the first two sessions of the week.

Year-to-date index returns fell to minus 6.72% from minus 6.36% on Thursday, minus 6.46% on Wednesday and minus 6.61% in the prior two sessions.

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