Talen paper down, CDS spreads widen; TPC gains; PBF edges up; Transocean flat to softer

By Cristal Cody

Tupelo, Miss., March 28 – Talen Energy Supply LLC’s notes fell about 1 5/8 points to 2¼ points on Monday, while its credit default swap spreads moved out nearly 3,000 basis points in the past week.

Talen’s bonds and paper from TPC Group Inc. saw some of the heaviest trading action in the distressed market during the session, a source said.

TPC’s 10½% senior secured notes due 2024 (Caa3/D/C) climbed 5/8 point as the company faces a default on its debt.

Distressed energy bonds were mixed as oil prices pulled back.

West Texas Intermediate crude oil benchmark futures for May delivery settled $7.94 lower at $105.96 a barrel.

PBF Energy Inc.’s senior notes traded about ¼ point to ½ point better as the week kicked off.

Transocean Inc.’s notes went out flat to over 1¼ points softer on Monday.

Stocks ended higher on the day, while measured market volatility fell back below 20.

The iShares iBoxx High Yield Corporate Bond ETF rose 51 cents to $81.83.

The Chicago Board Options Exchange’s CBOE Volatility index was down 4.04% to 19.97 by the close.

Talen notes, CDS weaken

Talen’s notes declined about 1 5/8 points to 2¼ points in strong trading action over the day, a market source said.

Talen’s 10½% senior notes due 2026 (Caa2/CCC/CCC) softened to as low as 29 3/8 bid before going out 1 5/8 points weaker on the day at 30 1/8 bid. Secondary volume totaled $12 million.

The notes traded ¼ point better on Friday.

Talen’s 6½% senior notes due 2025 (Caa2/CCC/CCC) also were active on Monday with $9 million of secondary supply. The issue opened ½ point lower and continued to soften through the afternoon, going out 2¼ points weaker at 28¾ bid.

The notes were flat on Friday at 31 bid.

Talen’s CDS spreads also widened further in the past week, according to a market source.

The CDS spreads increased over 2,900 bps to 10,691 bps for the week ended March 23.

The Woodlands, Tex., and Allentown, Pa.-based power company’s CDS spreads have gapped out more than 6,500 bps since mid-February.

TPC paper trades

TPC Group’s 10½% senior secured notes due 2024 (Caa3/D/C) rose 5/8 point to 41 3/8 bid on $11 million of paper traded on Monday, a market source said.

The bonds were flat on Friday at 40¾ bid on volume totaling $28.77 million.

TPC’s issue is down from the 73 bid area at the start of the year.

Moody’s Investors Service downgraded the issuer a week ago after the company missed an interest payment on its secured debt.

TPC has an extension until April 18 on a forbearance agreement with lenders for $53 million of coupon payments that were due in February on its 10½% first-priority lien notes and 10 7/8% first-priority lien notes due 2024.

The Houston-based chemical manufacturer entered into the forbearance agreement with Ad Hoc Group Ltd., which provided it with $52 million of liquidity by purchasing additional senior secured priming notes due 2024.

PBF improves

Petroleum refiner PBF Energy’s 6% senior notes due 2028 (Caa1/B/B-) improved about ½ point to 79½ bid on Monday, a market source said.

The Parsippany, N.J.-based company’s 7¼% senior notes due 2025 (Caa1/B/B-) edged up nearly ¼ point to the 89½ bid area by the end of the session.

Transocean mixed

Offshore driller Transocean’s 7½% senior notes due 2026 (Ca/CCC) were mostly flat at the 87¾ bid area on Monday, according to a market source.

The notes were up 7/8 point heading into the weekend.

Meanwhile, the Vernier, Switzerland-based company’s 7½% senior notes due 2031 (Ca/CCC) fell over 1¼ points to the 70¼ bid area by the end of the day.

Distressed index up

The S&P U.S. High Yield Corporate Distressed Bond index one-day total return came to 0.19% on Friday, compared to minus 0.19% on Thursday, 0.21% on Wednesday, 0.46% on Tuesday and 0.08% at the week’s start.

Month-to-date total returns were minus 2.39% on Friday, minus 2.57% on Thursday, minus 2.38% on Wednesday, minus 2.59% on Tuesday and minus 3.04% at the start of the prior week.

Year-to-date index returns were at minus 5.66% on Friday, versus minus 5.84% on Thursday, minus 5.65% on Wednesday, minus 5.85% on Tuesday and minus 6.29% in the March 21 session.

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