Talen declines; Transocean up; TPC rallies since bankruptcy filing; Carrols, GPS better

By Cristal Cody

Tupelo, Miss., June 8 – Talen Energy Supply LLC’s bonds dove 1¼ points to 3 points in strong trading on Wednesday with the paper remaining mostly higher since the company filed for Chapter 11 bankruptcy.

The energy company’s distressed paper was among the most active junk issues seen in the market during the session, a source said.

Market tone was mixed with stock indices all lower and volatility subsided over the session.

The iShares iBoxx High Yield Corporate Bond ETF dropped 68 cents to close at $77.56.

Offshore driller Transocean Inc.’s bonds were trading about 1¼ points to 2¼ points higher on the back of stronger oil prices on Wednesday.

West Texas Intermediate crude oil benchmark futures for July deliveries settled up $2.70 to $122.11 a barrel.

In other distressed paper, TPC Group Inc.’s 10½% senior secured notes due 2024 (Caa3/D/C) have climbed more than 15 points since the company filed for Chapter 11 bankruptcy a week ago.

Carrols Restaurant Group Inc.’s 5 7/8% senior notes due 2029 (Caa1/CCC) eased about ¼ point on Wednesday but were trading higher on the week after adding about 2½ points last week.

GPS Hospitality Holding Co. LLC’s 7% senior secured notes due 2028 (Caa1/B-/B-) were flat but quoted nearly 10 points higher since the end of May.

Talen bonds drop

Talen Energy’s 10½% senior notes due 2026 (/D/C) dropped 1¼ points on $22 million of paper traded on Wednesday, a source said. The bonds were quoted at 63¾ bid.

Talen’s 6½% senior notes due 2025 (/D/C) also slid 3 points to head out at 63 bid on $17 million of trading volume.

The company’s notes remain up from the low 40s bid range before the company filed for Chapter 11 bankruptcy in May.

Traders had reported keeping an eye on June 1 interest payments The Woodlands, Tex., and Allentown, Pa.-based power generation and infrastructure company was facing on its $400 million of 7 5/8% senior secured notes due June 1, 2028 (/D/CCC-) and $600 million of 6½% senior notes due June 1, 2025 (/D/C).

Talen announced Friday that it received a $1.3 billion equity investment commitment as part of its restructuring support agreement and has the option to upsize the offering to $1.65 billion.

Also, Talen said it received support from the majority of its unsecured notes to equitize more than $1.4 billion of bonds when the restructuring is completed. The proposals, along with expected new issuance and available cash, will help eliminate $3.2 billion of the company’s debt.

Transocean improves

Transocean’s 8% debentures due 2027 (Ca/CCC) jumped over 1½ points on Wednesday to a quote in the 80½ bid area on light supply totaling $1 million, a source said.

The Vernier, Switzerland-based offshore driller’s 6.8% senior notes due 2038 (C/CCC) saw more interest with the paper trading up 2¼ points to 62¼ bid on $5 million of volume.

TPC notes higher

TPC Group’s 10½% senior secured notes due 2024 (Caa3/D/C) rose ¼ point to 53½ bid in light secondary action on Wednesday, a market source said.

The issue is trading about 3½ points higher since Friday and has rallied from the 37 bid area ahead of the company’s June 1 Chapter 11 bankruptcy announcement.

TPC also reported a restructuring support agreement with an ad hoc group of holders of the majority of its 10½% first-priority lien notes and 10 7/8% first-priority lien notes due 2024.

The company missed a $53 million interest payment on the secured debt in February and had forbearance agreements that were extended until June 1.

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.

Carrols better in June

Carrols Restaurant Group’s 5 7/8% senior notes due 2029 (Caa1/CCC) fell about ¼ point to 76¼ bid in thin trading volume on Wednesday, a market source said.

The issue is trading ¾ point higher this week after climbing about 2½ points last week.

The notes had declined to a 65 handle in May after the company reported weak first-quarter earnings.

The Syracuse, N.Y.-based company operates more than 1,000 Burger King and Popeyes Louisiana Kitchen restaurants in the United States.

GPS gains over week

While GPS Hospitality’s 7% senior secured notes due 2028 (Caa1/B-/B-) were flat on the day at 74 bid in thin secondary action, the issue has rallied in the past eight days, a source said.

The notes traded at the end of May and start of June at the 64½ bid to 65¼ bid range.

The Atlanta-based privately held company is a franchisee of Burger King, Pizza Hut and Popeyes restaurants.

Distressed index declines

The S&P U.S. High Yield Corporate Distressed Bond index softened on Tuesday.

One-day total returns declined to minus 0.53% from 0.27% on Monday.

Month-to-date total returns fell to minus 0.04% from 0.49% at the start of the week.

Year-to-date index returns were lower on Tuesday at minus 14.55% versus minus 14.1% on Monday.

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