Talen Energy bonds lifted; Diebold Nixdorf softens following downgrade; Staples lower

By Cristal Cody

Tupelo, Miss., May 20 – Talen Energy Supply LLC’s bonds gained over 3 points on Friday on more than $13 million of volume as the company moves forward in the Chapter 11 bankruptcy process.

Diebold Nixdorf Inc.’s notes traded down about ¼ point after Moody’s Investors Service downgraded the company and its secured and unsecured bond ratings on weaker-than-expected first-quarter earnings.

The company’s 8½% notes due 2024 were softer on the day but ended the week about 1¼ points higher.

Overall distressed trading action was light with stronger activity seen in junk paper from Carvana Co. that was heading out mixed, a source said.

Market tone was mostly soft with stocks pulling back from heavier losses by the close.

The Chicago Board Options Exchange’s CBOE Volatility index climbed 6.44% to back above a 30 handle earlier in the day before ending the session up 0.27% at 29.43.

The iShares iBoxx High Yield Corporate Bond ETF finished off 5 cents at $76.46.

Staples Inc.’s 10¾% senior notes due 2027 also remained soft on Friday and trading at a yield of nearly 20%. The issue was down ½ point after declining 2½ points on Thursday.

Talen Energy up

Talen Energy’s 6½% senior notes due 2025 (C/D/C) traded over 3¼ points higher on Friday to the 56½ bid area, a source said.

Secondary activity was steady with $8 million of volume reported.

The notes have improved about 4 points during the week.

Talen’s 10½% senior notes due 2026 (C/D/C) also picked up 3½ points to hit 57 bid by the close on $5 million of volume.

The issue has improved from the 41 bid range seen before The Woodlands, Tex., and Allentown, Pa.-based power generation and infrastructure company announced May 10 that it filed for Chapter 11 bankruptcy.

Diebold Nixdorf lower

Diebold Nixdorf’s 8½% notes due 2024 (Ca/CCC-) fell ¼ point to 47½ bid over Friday’s session, a market source said.

The notes were about 1¼ points higher from a week ago but well off where the issue traded at the 75 bid range at the start of the month.

Moody’s said Friday the downgrade follows the company’s “substantially” weaker-than-expected first-quarter earnings report and downward revision of forward guidance.

S&P lowered the company’s ratings on May 11 based on an “unsustainable capital structure.”

The Hudson, Ohio-based financial technology company reported May 10 a wide first-quarter loss and released a revised and lower outlook for fiscal 2022 revenue.

Staples notes soften

Staples’ 10¾% senior notes due 2027 (Caa2/CCC+) were quoted down ½ point at 73 bid on Friday on $11 million of paper changing hands, a source said.

The notes shed 2½ points in Thursday’s secondary action.

Staples’ CDS spreads also moved out nearly 500 basis points in the past week ended Wednesday.

The Framingham, Mass.-based office supply chain’s bonds have declined about 15 points since April.

Distressed index down

Returns in the S&P U.S. High Yield Corporate Distressed Bond index remained weak on Thursday after diving midweek.

The index saw one-day total returns of minus 0.81% on Thursday, minus 1.34% on Wednesday, 0.23% on Tuesday and minus 0.13% on Monday.

Month-to-date total returns softened to minus 9.8% from minus 9.06% on Wednesday, minus 7.82% on Tuesday and minus 8.04% at the week’s start.

Year-to-date index returns widened to minus 16.92% from minus 16.23% on Wednesday, minus 15.09% on Tuesday and minus 15.29% on Monday.

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