Talen paper declines; distressed secondary action thin as Fed hikes rates; AMC on mend

By Cristal Cody

Tupelo, Miss., March 16 – Talen Energy Supply LLC’s bonds continued to weaken in the secondary market on Wednesday with the paper down over 1½ points to 2¼ points in steady trading.

Talen’s 10½% senior notes due 2026 (Caa2/CCC/CCC) dropped 2¼ points after shedding nearly 3½ points on Tuesday.

The bulk of distressed secondary bond trading was mostly limited to emerging markets issues following the Federal Reserve’s rate hike on Wednesday, a source said.

Stocks climbed after the Fed announced it will raise the target range on the Federal Funds rate to 0.25% to 0.5%.

The iShares iBoxx High Yield Corporate Bond ETF climbed $1.13 to $81.70.

Measured market volatility sank over 10%.

The Chicago Board Options Exchange’s CBOE Volatility index fell 10.86% to 26.67.

Oil prices continued to retreat from highs earlier in the month following Russia’s invasion of Ukraine.

West Texas Intermediate crude oil benchmark futures for April deliveries declined $1.40 to settle at $95.04 a barrel.

In other secondary trading, AMC Entertainment Holdings, Inc.’s 10% senior secured second-lien notes due 2026 (Caa3/CCC-) climbed nearly 2 points over the session before pulling back and going out 3/8 point better.

The notes were off 7/8 point on Tuesday following AMC’s announcement it invested in a gold and silver mine after trading Monday down 1 7/8 points.

Talen notes lower

Talen’s 10½% senior notes due 2026 (Caa2/CCC/CCC) shed 2¼ points by the end of Wednesday’s session, going out at 31¾ bid, a market source said.

Trading supply hit over $4.55 billion.

The unsecured notes declined nearly 3½ points on Tuesday.

Talen’s 6½% senior notes due 2025 (Caa2/CCC/CCC) also traded over 1½ points weaker on Wednesday at a print of 29.62 in heavier secondary supply of more than $7.34 million.

The Woodlands, Tex., and Allentown, Pa.-based power company’s credit default swaps have been weak in March.

Talen’s CDS spreads have widened over 1,000 basis points in the past three weeks to 5,201 bps for the week ended March 9, according to reports from Moody’s Investors Service.

AMC bonds up

AMC’s 10% senior secured second-lien notes due 2026 (Caa3/CCC-) climbed nearly 2 points before easing off the day’s gains, going out 3/8 point better at 86½ bid, a source said.

The notes were off 7/8 point on Tuesday after trading Monday down 1 7/8 points.

AMC’s 5 7/8% subordinated notes due 2026 (Ca/CCC-) improved over 1 point to the 68 bid range by the day’s close after trading over 2 points weaker on Tuesday.

AMC’s new 7½% first-lien notes due 2029 that priced in February saw the heaviest activity in the secondary market during the session with $20.25 million of volume.

The notes were up 1 5/8 points at 95½ bid.

The Leawood, Kan.-based movie theater owner announced on Tuesday that it purchased a 22% stake of Hycroft Mining Holding Corp. for $27.9 million in cash.

Hycroft operates the 71,000-acre gold and silver Hycroft Mine in Nevada.

Distressed returns

The S&P U.S. High Yield Corporate Distressed Bond index one-day total return improved on Tuesday to minus 0.91% from minus 1.07% on Monday, according to the latest market data available.

Month-to-date total returns remained soft at minus 4.81% on Tuesday, compared to minus 3.94% at the start of the week.

Year-to-date index returns hit minus 8% on Tuesday, down from minus 7.15% on Monday.

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