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Morning Commentary: Earthstone up on acquisition news; Tenneco bonds rebound modestly
By Paul A. Harris
Portland, Ore., Aug. 21 – Bonds of Earthstone Energy, Inc. climbed on Monday on news that the Texas-based oil and gas exploration and production company will be acquired by Permian Resources Corp., according to a bond trader in New York.
The Earthstone Energy Holdings, LLC 8% senior notes due April 2027 were up 3 points on the morning, at 102 bid, 102¼ offered, the trader said.
Permian will acquire Earthstone in an all-stock transaction valued at $4.5 billion.
The deal is expected to close by the end of the year.
After sustaining steady price erosion through most of last week, bonds placed in a deeply discounted sale to extract hung-up Tenneco Inc. secured bridge debt from dealer balance sheets staged a modest recovery on Monday morning.
The Tenneco 8% senior secured notes due November 2028 (B1/B) were 82¼ bid, 83 offered at mid-morning, the trader said.
Late last week those bonds were seen as low as 81 bid.
The $1.9 billion issue priced at 85 to yield 11.933% on Aug. 15.
The broad high-yield bond market was up 1/8 of a point at mid-morning, off of the morning highs, the trader said.
The high-yield index was unchanged to slightly lower.
With equities mixed at mid-morning, and the yield of the 10-year Treasury spiking to 4.35% – its highest in a decade-and-a-half – the iShares iBoxx $ High Yield Corporate Bd (HYG) share price was down 0.27%, or 20 cents, at $73.89.
As the new week got underway, the most recent issue to clear the market, the Maxim Crane Works, LP 11½% second priority senior secured notes due September 2028 (Caa1/B-), continued to turn in a solid performance in the secondary, at par bid, par ½ offered, according to the trader.
Late last week those bonds were trading at 99¾ bid, par ½ offered.
The $500 million issue priced last Thursday at 98.158 to yield 12%.
The primary market was idle on Monday morning.
New issue activity is expected to be sparse ahead of the Labor Day holiday weekend, which gets underway following the Sept. 1 close.
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