Gran Tierra notes rally; Nabors up; China Evergrande flat; Kaisa higher; Sunac jumps

By Cristal Cody

Tupelo, Miss., Dec. 10 – Secondary trading in the distressed debt market slowed on Friday with energy paper trading flat to stronger on the day.

Gran Tierra Energy Inc.’s 7¾% senior notes due 2027 (B/B-) were among the day’s standouts with the issue up 3 1/8 points.

Gran Tierra’s 2022 production forecast on Thursday “sent their bonds up 2 points yesterday and up a little more than 3 points today,” a market source said.

Nabors Industries Inc.’s senior notes climbed over 1¾ points to about 3 points on Friday.

Transocean Inc.’s bonds were flat to about ½ point better.

“Energy is still fairly steady today,” a source said.

Oil prices were higher on the day and going out over $5 better on the week.

West Texas Intermediate crude oil benchmark futures for January deliveries settled Friday up 73 cents at $71.67 a barrel.

Overall tone was positive in the quiet session as activity thins heading into the holidays and year-end, according to market sources.

“There’s not a lot of stuff going on today,” a source said.

The iShares iBoxx High Yield Corporate Bond ETF rose 20 cents to $86.63.

China Evergrande Group’s paper traded flat on Friday, while Kaisa Group Holdings Ltd.’s notes gained following reported defaults by both companies the previous day from Fitch Ratings.

Kaisa was “not up a lot,” a source said Friday. “There was some trading midday.”

The debt non-payments triggers events of default on the companies’ other dollar bonds, according to Fitch.

Other issuers in China’s property developer space that have missed bond payments and are facing defaults include Fantasia Holdings Group Co. Ltd., Sinic Holdings (Group) Co. Ltd., China Properties Group Ltd., Modern Land (China) Co. Ltd. and Sunshine 100 China Holdings Ltd.

Meanwhile Friday, Sunac China Holdings Ltd.’s 6½% notes due 2023 (B1/B) jumped 4 points as the company works to raise funds.

Gran Tierra stronger

Gran Tierra Energy’s 7¾% senior notes due 2027 (B/B-) climbed 3 1/8 points to 93 3/8 bid on Friday on $1.5 million of secondary supply, sources reported.

The Calgary, Alta.-based company released its 2022 capital budget and production guidance on Thursday.

On Wednesday, Fitch upgraded Gran Tierra Energy International Holdings Ltd.'s issuer ratings and raised the oil and natural gas company's senior unsecured notes ratings.

Nabors notes up

Other energy issues trading higher on Friday included Nabors Industries’ paper, a source said.

Nabors’ 7¼% senior notes due 2026 (Caa1/CCC-) improved over 3 points to 93 bid on $3 million of secondary supply.

The Bermuda- and Houston-based oil and gas drilling contractor’s 7 3/8% senior priority guaranteed notes due 2027 (B3/B-) saw heavier secondary supply with nearly $15 million of bonds traded.

The notes went out up more than 1¾ points at 103 bid.

Transocean mixed

Transocean’s 8% debentures due 2027 (C/CCC) ended the day mostly unchanged around 71½ bid in light trading, a source reported.

“Not a lot of activity,” the source said.

The Vernier, Switzerland-based offshore driller’s 6.8% notes due 2038 (C/CCC-/) were more active in the secondary market and traded up about ½ point to 55 bid.

Evergrande flat

China Evergrande’s notes were quiet to unchanged on Friday after a default was reported the prior day, a source said.

Evergrande’s 8¾% senior notes due 2025 (C/C/C) traded ½ point better at the start of the session but headed for the close flat at 20¾ bid.

The issue is up ½ point from a week ago.

Evergrande’s 8¼% senior notes due 2022 (C/C/C) were last seen trading flat on Tuesday at 23 bid after shedding 9 points on Monday.

Fitch on Thursday lowered Evergrande and subsidiaries Hengda Real Estate Group Co. Ltd. and Tianji Holding Ltd. after the grace period lapsed on Monday following missed coupon payments due Nov. 6 for Tianji’s $645 million of 13% bonds due 2022 and $590 million 13¾% notes due 2023.

The Shenzhen, China-based real estate developer reported a week ago that it could not guarantee the group will have sufficient funds for its financial obligations.

Kaisa edges up

Kaisa’s 9 3/8% senior notes due 2024 (C//C) traded as much as 1½ points better in the distressed space early Friday before pulling back and going out ½ point stronger from Thursday at 34½ bid, a source said.

The notes fell about 1 point on Thursday after Fitch downgraded the company, citing a missed payment on its $400 million of 6½% bonds that were due on Tuesday.

The issue is about 2¾ points softer on the week.

Trading in Kaisa’s shares on the Hong Kong Stock Exchange was halted on Wednesday, pending a company announcement.

The Shenzhen, China-based real estate developer did not release any announcements on Thursday or Friday.

Sunac adds 4 points

Sunac China’s 6½% notes due 2023 (B1/B) climbed 4 points over the day to 83 bid, sources said.

The notes saw $1 million of trading volume.

The Tianjin, China-based property developer announced Wednesday that it sold $530 million of American Depositary Shares of KE Holdings Inc. to raise funds for general working capital.

Distressed returns soft

Distressed index daily returns were soft over the back half of the week.

The S&P U.S. High Yield Corporate Distressed Bond index’s one-day total return was minus 0.2% on Thursday, minus 0.59% on Wednesday, 0.58% on Tuesday and 0.34% on Monday.

Month-to-date returns totaled 1.6% on Thursday, 1.8% on Wednesday, 2.4% on Tuesday and 1.81% at the start of the week.

Year-to-date total returns declined to 23.72% on Thursday from 23.96% on Wednesday, 24.69% on Tuesday and 23.98% on Monday.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.