Transocean gains on new offering; Community Health uptrend continues; Party City lower

By Abigail W. Adams

Portland, Me., Jan. 9 – The distressed debt space saw another strong start to the week with ETF buyers and bargain shoppers lifting several names even as bankruptcy news swirled in the first week of the year.

While volume was thin, several names remained well bid despite the early demise of some distressed retail names, a source said.

The S&P U.S. High Yield Corporate Distressed Bond index surged 1.5% on Monday, lifting year-to-date gains to 3%.

Transocean Inc.’s junk bonds jumped higher on Monday on the heels of a new debt offering.

Community Health Systems Inc.’s junk bonds continued to ride the strong market wave and continued their uptrend during Monday’s session.

Meanwhile, Party City Holdings Inc.’s 8¾% senior secured notes due 2026 (Caa3/CCC) moved lower after plunging the previous session on news the retailer was preparing a bankruptcy filing.

Transocean higher

Transocean’s junk bonds jumped higher on Monday after the offshore drilling contractor announced a new debt offering.

Transocean’s 7½% senior notes due 2031 (C/CCC) rose 4½ points to close the day wrapped around 74, according to a market source.

The yield was 12 5/8%.

Transocean’s 8% senior notes due 2027 (C/CCC) rose 2 points to 82 with the yield 13¾%.

The notes were on the rise after Transocean announced and priced an upsized $525 million offering of five-year senior secured notes at par to yield 8 3/8%.

Proceeds will be used, in part, to fund a debt service reserve account.

The demand for the new offering and the strong execution was a boon to the credit, a source said.

It helped assuage concern over refinancing risks, which are running high in the market.

Community Health’s uptrend

Community Health continued to ride the wave of buying interest in the market with the notes continuing their strong uptrend on Monday.

Community Health’s 8% senior secured first-lien notes due 2026 (B2/B) added another ½ point to close Monday at 95½ with the yield 9 5/8%.

The notes rose 4 points the previous week.

Community Health’s 6 1/8% senior notes due 2030 (caa2/CCC) added another 2 points to close Monday at 59¼.

The notes have risen 8 points since the start of the year.

Party City lower

Party City’s 8¾% senior secured notes due 2026 continued to move lower after plummeting the previous session over news of a prospective bankruptcy filing.

The 8¾% notes dipped another ½ point to close Monday in the 20 to 20½ context, a source said.

The notes sank 11 points to close the previous session wrapped around 21.

News broke late last Thursday that Party City would not be able to make a coupon payment due in February and was negotiating with its first-lien creditors ahead of a bankruptcy filing.

Party City was the second distressed retailer at the center of bankruptcy news last week.

Bed Bath & Beyond Inc.’s junk notes also plummeted after the company warned of a potential bankruptcy filing following its failed distressed debt exchange.

Bed Bath & Beyond’s 3.749% senior notes due 2024 (C/D) regained some footing after plummeting 16 points last week.

The 3.749% notes climbed 1 point to close Monday wrapped around 7.

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