Transocean, NGL climb; Talen notes skid; Intelsat Jackson lower; distressed index up

By Cristal Cody

Tupelo, Miss., Aug. 25 – Distressed energy bonds mostly gained in secondary trading on Wednesday as oil prices ended $6 to $7 higher week to date.

The late summer trading supply remains thin, though, sources report.

Transocean Inc.’s notes improved about 2 1/8 points to 3 points after the company’s bonds traded about 1¾ points to 3½ points higher on Tuesday.

The 7½% notes due 2026 (Ca/CCC+) rose 2¼ points on about $3.5 million of volume on Wednesday.

NGL Energy Partners LP’s 7½% senior notes due 2026 (Caa1/CCC+) gained 1¾ points during the session on $2.75 million of secondary supply.

PBF Holding Co. LLC’s 9¼% senior secured notes due 2025 (Ba3/BB/BB) traded 1¾ points higher on Wednesday on $4.82 million of secondary action after the bonds added 2½ points on volume totaling more than $22 million in the prior session.

Talen Energy Supply LLC’s paper was the exception in the energy space and sank about 1¾ points to 8 7/8 points by the close, a source said.

Talen’s 10½% senior notes due 2026 (B3/CCC/B-) fell 1¾ points on $3.34 million of trading volume.

In other distressed issues, Intelsat Jackson Holdings SA’s bonds softened after the parent company reported that it filed an amended Chapter 11 bankruptcy plan of reorganization.

The 9¾% senior notes due 2025 fell ½ point.

Transocean gains

Transocean’s 7½% notes due 2026 (Ca/CCC+) traded up 2¼ points at 73¾ bid on about $3.5 million of volume, a source said Wednesday.

The Vernier, Switzerland-based offshore driller’s bonds have recovered about 5 points week to date after ending the prior week down 5¾ points at the 69 bid area.

Transocean’s 11½% senior guaranteed notes due 2027 (Caa3/CCC+) added 2 1/8 points to 98 5/8 bid on $3.6 million of secondary supply on Wednesday.

The notes traded 2 points better on Tuesday on $4 million of volume.

Also Wednesday, Transocean’s 6.8% senior notes due 2038 (C/CCC) rose 2½ points to 53¼ bid on over $1 million of secondary trades.

NGL, PBF rally

In other energy issues, NGL Energy Partners’ 7½% senior notes due 2026 (Caa1/CCC+) improved 1¾ points to 82 bid in light trading totaling $2.75 million over the session, a source said.

The Tulsa, Okla.-based diversified midstream services provider’s notes are about 2¼ points weaker from the start of the month.

PBF’s 9¼% senior secured notes due 2025 (Ba3/BB/BB) traded up 1¾ points to 93½ bid on $4.82 million of secondary supply over the session.

The issue added about 2½ points on Tuesday on volume totaling more than $22 million.

The Parsippany, N.J.-based petroleum refiner’s secured notes have climbed 5¾ points week to date.

Talen declines

Talen’s paper declined about 1¾ points to 8 7/8 points in trading on Wednesday after the notes slid 1¼ points to 4 points in the prior session, a source said.

Talen’s 6½% senior notes due 2025 (B3/CCC/B-) were down 3 points at 37 bid on over $6 million of notes traded.

The bonds declined 1¼ points on Tuesday after gaining about 1½ points on Monday.

Talen’s 10½% senior notes due 2026 (B3/CCC/B-) softened 1¾ points to 39 bid on $3.34 million of trading volume during Wednesday’s session.

The issue fell 4 points on Tuesday after starting the week up 1¾ points.

Talen’s 6% senior notes due 2036 (B3/CCC/B-) also headed out down 2¾ points at 29¼ bid on Wednesday. Secondary supply was just over $2 million.

S&P Global Ratings downgraded The Woodlands, Tex., and Allentown, Pa.-based power company and its senior secured and unsecured bonds in the previous week.

Intelsat Jackson dips

Meanwhile Wednesday, Intelsat Jackson Holdings’ 9¾% senior notes due 2025 fell ½ point to 54½ bid, a market source said.

The issue remains down from 71½ bid at the start of the year.

Luxembourg-based parent company Intelsat SA said Tuesday that it has received support of key creditor groups to reduce its debt to $7 billion from nearly $15 billion under its Chapter 11 restructuring.

A hearing to approve the company’s disclosure statement and vote solicitation procedures on the amended plan is scheduled for Sept. 1 in the U.S. Bankruptcy Court for the Eastern District of Virginia, Richmond Division.

The McLean, Va.-based satellite operator, which filed for Chapter 11 on May 4, 2020, expects to exit bankruptcy by the end of the year.

Distressed index stronger

Distressed index daily returns improved over the first two sessions of the week.

The S&P U.S. High Yield Corporate Distressed Bond index total return was 1.25% on Tuesday, compared to 0.47% on Monday and 0.34% on Friday.

Month-to-date total returns improved to minus 0.54% on Tuesday versus minus 1.77% on Monday and minus 2.23% at the end of the prior week.

Distressed year-to-date total returns rose to 23.23% in the prior session from 21.7% on Monday and 22.13% on Friday.

Market tone remained positive in the risk-on environment as volatility waned and oil prices crept higher.

North Sea Brent crude oil futures for October deliveries added $1.20 to settle the day at $72.75 a barrel, over $7 higher week to date.

West Texas Intermediate crude oil benchmark futures for October deliveries settled 82 cents higher at $68.36 a barrel. WTI crude oil prices have climbed over $6 a barrel in the first three sessions.

The iShares iBoxx High Yield Corporate Bond ETF closed Wednesday up 9 cents at $87.77.

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