Peabody Energy, Talen bonds decline; Washington Prime flat; Intelsat Jackson down; Endo drops

By Cristal Cody

Tupelo, Miss., July 12 – Peabody Energy Corp.’s 6 3/8% senior secured notes due 2025 (Caa1/D) softened on the heels of the company’s S&P Global Ratings downgrade on Monday.

The notes fell ½ point to 77 bid by the close, a source said.

The St. Louis-based coal producer’s notes are nearly 20 points higher since the end of May and better than where the issue started the year at 54½ bid.

Peabody’s 8½% senior secured notes due 2024 (Caa1/D) were last seen on Thursday up more than 1¼ points at 78½ bid in thin trading of less than $1 million.

The issue was quoted on April 8 trading at 47¼ bid.

S&P, on Monday, dropped Peabody’s bond ratings to D from CCC- and lowered the issuer’s credit rating to SD from CCC.

The downgrades follow Peabody’s July 7 announcement of a tender offer to purchase for cash up to $13.28 million of its 8½% notes due 2024 at a price equal to 73.84, plus accrued and unpaid interest, as well as its letters-of-credit revolving facility due in 2024 at a discount to par.

During the second quarter, Peabody purchased roughly $53.13 million of its first-lien debt, including the 2025 and 2024 notes, at a price of about 73.84 of par on the open market, S&P said.

“We view the tender offer and debt repurchases as distressed and tantamount to default because lenders are receiving less than originally promised,” the agency noted Monday.

S&P said it plans to lower the rating on Peabody’s letters-of-credit revolving facility to D once the tender is completed, as well as reassess the issuer’s credit and bond ratings.

Peabody’s tender offer expires on Aug. 6.

Talen bonds sink

Oil prices settled lower on Monday after ending Friday more than $1 higher.

North Sea Brent crude oil futures for September deliveries fell 39 cents to settle at $75.16 a barrel.

West Texas intermediate crude oil benchmark futures for August deliveries settled down 46 cents at $74.10 a barrel, and September deliveries declined 37 cents to settle at $73.44 a barrel.

The S&P U.S. High Yield Corporate Distressed Bond index ended Friday down 0.08% on the day and down 1.07% for month-to-date total returns. The index’s year-to-date total returns were 26.5% on Friday.

Overall market tone was mixed Monday with corporate earnings releases this week in focus.

JPMorgan Chase & Co. and Goldman Sachs Group Inc., among others, will post second-quarter results on Tuesday.

The iShares iBoxx High Yield Corporate Bond ETF fell 3 cents to $87.97.

In distressed energy issues, Talen Energy Supply LLC’s bonds traded down another 1½ points to 3 points on Monday following declines of 2 points to 2½ points on Friday, a source reported.

Talen’s 7¼% senior secured notes due 2027 (Ba3/BB-/BB) fell 2 points to 86½ bid on more than $18.9 million of paper traded Monday.

The bonds traded at 106¾ bid as the year opened. The issue fell below par in June.

The company’s 6½% senior notes due 2025 (B3/CCC+/B) also sank 3 points to 55 bid on $10 million of trading activity Monday.

The notes softened about 7½ points in the prior week and weakened from the 84½ bid range at the end of May and the 82 bid area at the start of the year.

Talen’s 10½% senior notes due 2026 (B3/CCC+/B) dropped nearly 1½ points to 62½ bid on $2.5 million of secondary supply over the day.

The notes went out Friday about 8 points softer on the week.

The bonds traded at 91 bid at the end of May and the 89 bid area in early January.

The Woodlands, Texas and Allentown, Pa.-based power company’s outlook was dropped to negative from stable on June 16 by Moody’s Investors Service.

Washington Prime steady

Washington Prime Group, LP’s 6.45% notes due 2024 (C/D/CC) were flat late afternoon at 66 bid following the bankrupt company’s disclosure statement hearing on Monday, a source said.

The notes rose ¾ point on Friday.

Washington Prime received conditional approval of the disclosure statement for its Chapter 11 plan of reorganization, according to a filing Monday with the U.S. Bankruptcy Court for the Southern District of Texas.

Washington Prime Group Inc. filed for Chapter 11 on June 13.

The bankruptcy filing followed a forbearance period after Washington Prime missed a $23.2 million interest payment on the 6.45% notes that was due Feb. 15.

The Columbus, Ohio-based shopping center real estate investment trust secured a $100 million non-amortizing multiple-draw super-priority senior secured debtor-in-possession term loan facility from the consenting creditors to support daily operations.

Intelsat Jackson softens

Intelsat Jackson Holdings SA’s 5½% senior notes due 2023 softened ½ point to 55½ bid on Monday after the company’s Chapter 11 bankruptcy statement hearing was adjourned, a source said.

The notes are down from the 67½ bid range at the start of the year.

Parent company Intelsat SA’s Chapter 11 bankruptcy statement hearing was adjourned to Aug. 11, according to a notice on Friday with the U.S. Bankruptcy Court for the Eastern District of Virginia, Richmond Division.

The hearing has been adjourned several times since first scheduled for May 11.

The McLean, Va.-based satellite operator announced in February that it reached a Chapter 11 bankruptcy restructuring plan that would reduce its debt to $7 billion from nearly $15 billion.

Intelsat filed for Chapter 11 bankruptcy on May 4, 2020.

Endo bonds decline

Meanwhile, Endo Finance LLC’s bonds remained soft in heavy secondary trading on Monday after sinking in the prior week.

Endo’s 6% senior notes due 2028 (Caa2/CCC+) slipped nearly 1 point to 59 7/8 bid on $15.5 million of secondary trading during the session, a source said.

The notes plunged in heavy trading over the prior week, including softening 2¾ points on $7 million of volume on Wednesday, 1 7/8 points on $26.8 million of volume Thursday and about 1¼ points on Friday on more than $8.5 million of secondary supply on Friday.

The notes traded at the 84 bid area at the beginning of 2021.

Endo’s 9½% senior secured notes due 2027 (Caa2/CCC+) also traded Monday down 1½ points at 96¼ bid on $9 million of secondary activity during the session.

Parent Dublin-based pharmaceuticals maker Endo International plc will release second-quarter results on Aug. 5.

The company, facing several lawsuits related to its role in the opioid epidemic, reported soft first-quarter earnings and revenue in May.

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