Transocean bonds decline as oil prices sink; Cheniere Energy weakens; Rite Aid quiet

By Cristal Cody

Tupelo, Miss., Sept. 23 – Transocean Inc.’s notes dropped about 2¼ points to more than 5 points on Friday after oil prices slid nearly $5 a barrel.

The offshore driller’s 7½% senior notes due 2031 (C/CCC-) sank more than 5 points.

West Texas Intermediate crude oil benchmark futures for November deliveries declined $4.75 to settle the day at $78.84 a barrel.

Cheniere Energy Partners LP’s 4% senior notes due 2031 (Ba2/BB+/BB+) fell more than 1½ points on Friday and were ending the week 2¼ points lower.

Volatility continued to climb during the session, and stock indexes all declined.

The S&P 500 index dropped 1.72% by the end of the day.

The iShares iBoxx High Yield Corporate Bond ETF gave back 93 cents, or 1.27%, to $72.13.

The CBOE Volatility index jumped 9.4% higher to 29.92 by Friday afternoon.

Distressed bond trading action was lighter headed into the weekend, according to market sources.

Secondary activity in Rite Aid Corp.’s 8% senior secured notes due 2026 (B3/CCC-/BB-) quieted after the issue declined more than 2 points on Thursday.

Transocean notes down

Transocean’s notes declined in mostly light secondary supply over the day, sources said.

The company’s 7½% senior notes due 2031 (C/CCC-) sank more than 5 points to 51 bid on about $2.7 million of trading volume.

Transocean’s 7½% senior notes due 2026 (Ca/CCC) declined about 3¼ points to the 75½ bid area.

The bonds headed out about 5 7/8 points softer on the week after giving back 1 point on Thursday, ¼ point on Wednesday, ½ point on Tuesday and 7/8 point on Monday.

Transocean’s 8% debentures due 2027 (C/CCC-) also went out Friday at 71¼ bid, down 2¼ points on the day and 5¾ points on the week.

The Steinhausen, Switzerland-based offshore driller announced earlier in September that it executed a privately negotiated bond exchange and purchase agreements that provides it with $175 million of liquidity.

The transactions, considered a distressed exchange by S&P Global Ratings, are expected to close Sept. 30.

Cheniere Energy lower

Cheniere Energy’s 4% senior notes due 2031 (Ba2/BB+/BB+) fell more than 1½ points on Friday to 83¼ bid, a source said.

The notes were going out 2¼ points lower from a week ago.

Cheniere Energy is a Houston-based energy company.

Rite Aid declines

Secondary action in Rite Aid’s 8% senior secured notes due 2026 (B3/CCC-/BB-) quieted over the day with the notes last seen trading in the prior session down more than 2 points at 79 bid, a source said.

The issue was ending the week nearly 2¼ points softer.

The Camp Hill, Pa.-based drug retailer’s credit default swap spreads also widened 203 basis points to 2,082 bps for the past week ended Wednesday, according to a Moody’s Investors Service note.

Distressed returns

S&P U.S. High Yield Corporate Distressed Bond index one-day returns slid to minus 1.03% on Thursday from 0.39% on Wednesday, minus 0.19% on Tuesday and 0.44% on Monday.

Month-to-date total returns were down at minus 2.44% versus minus 1.43% on Wednesday, minus 1.81% on Tuesday and minus 1.62% on Monday.

Year-to-date total returns also moved lower to minus 23.02% on Thursday from minus 22.22% on Wednesday, minus 22.53% on Tuesday and minus 22.38% at the week’s start.

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