Callon, PBF, Ensign, Nine Energy notes trade lower; Telesat down; Credito Real plunges

By Cristal Cody

Tupelo, Miss., Jan. 28 – Distressed energy bonds went out mostly lower on Friday in light secondary action.

Callon Petroleum Co.’s junk paper was “moving a lot,” a source said.

The Houston-based oil and natural gas company’s 8% senior notes due 2028 (Caa2/B/B) dropped 2½ points to 101½ bid.

PBF Energy Inc.’s senior notes were less than 1 point lower on the day and mostly unchanged on the week.

Houston-based oil and gas producer W&T Offshore Inc.’s 9¾% senior secured notes due 2023 (Caa2/B) traded Friday modestly weaker at 97½ bid, about ¾ point lower from a week ago, a source said.

The 9¼% senior notes due 2024 (Caa2/CCC) from Calgary, Alta.-based oilfield servicer Ensign Drilling Inc. were quiet after trading Thursday at the 95¾ bid area, about ¼ point softer on the week.

Nine Energy Service, Inc.’s paper has declined in thin trading as the company faces delisting from the New York Stock Exchange and a court judgment in January.

Issuers in the energy space including PBF Holding Co. LLC, W&T Offshore and Ensign Drilling are among the largest and most distressed names so far this year, according to a BofA Securities Inc. research note on Friday.

Several, including Nine Energy Service and oilfield services provider KLX Energy Services Holdings Inc., top default watch lists.

Houston-based KLX Energy’s 11½% senior secured notes due 2025 (Caa1/CCC+) were last active on Jan. 21 at 55½ bid, a source said.

“It’s fairly flat, staying around 55,” the market source said.

Distressed secondary action remained light during the session.

99 Cents Only Stores LLC’s 7½% senior secured notes due 2026 (Caa2/B-) were quiet after drifting lower on Thursday.

Market tone improved on Friday as stock indices climbed and the Fear Factor index subsided to below 30.

The Chicago Board Options Exchange’s CBOE Volatility index dropped 9.28% by the close to 27.66, still elevated from the 17 range at the start of the month.

The iShares iBoxx High Yield Corporate Bond ETF closed up 24 cents to $84.68 after losses over the first four sessions of the week.

Oil prices were slightly higher.

West Texas Intermediate crude oil benchmark futures for March deliveries settled up 21 cents to $86.82 a barrel.

In other trading, Telesat Corp.’s notes were mixed but mostly lower on the week.

Telesat’s 6½% senior notes due 2027 (Caa1/B) recovered about 1¾ points on Friday but went out about 5¾ points lower on the week.

“Telesat is slipping a little bit over financing and execution concerns,” a source said.

In emerging markets distressed issues, Credito Real SAB de CV’s paper plunged this week following downgrades from S&P Global Ratings and Fitch Ratings.

PBF dips

PBF’s paper was lower on the day but mostly unchanged on the week, a source said Friday.

The 7¼% senior notes due 2025 (Caa1/B/B-) fell 7/8 point to 79 bid.

PBF’s 6% senior notes due 2028 (Caa1/B/B-) were down less than ¼ point at 70¼ bid by the close.

The Parsippany, N.J.-based petroleum refiner’s notes have been fairly active in trading since Morgan Stanley raised the company’s stock price objective to $20 from $17 earlier in the month.

Nine Energy soft

Nine Energy's 8¾% notes due 2023 (Caa3/D) were last seen in the secondary market on Jan. 20 at the 43¼ bid area, down over 5 points since December, a source said.

The Houston-based oilfield services company reported on Jan. 24 that a jury in the Western District of Texas, Waco Division reached a verdict that found Nine Energy infringed on a patent held by NCS Multistage Holdings, Inc. and awarded NCS damages in the amount of less than $500,000.

Nine Energy said it plans to appeal.

The company also announced on Jan. 7 that it received notice from the New York Stock Exchange that the company is not in compliance with continued listing standards because its average global market capitalization over a consecutive 30 trading-day period and last reported stockholders’ equity were both below $50 million.

Nine Energy said it has 45 days from receipt of the Jan. 5 notice to submit a business plan to the NYSE demonstrating how it intends to regain compliance with the NYSE’s standards within 18 months.

If the plan it accepted, Nine Energy said it will be subject to quarterly monitoring for compliance, and if the committee does not accept the business plan, the company will face delisting and suspension by the NYSE.

99 cents quiet

99 Escrow Issuer Inc.’s 7½% senior secured notes due 2026 (Caa2/B-) were quiet during the session after drifting lower on Thursday to near the 76¼ bid area, a market source said.

The bonds were last seen in the prior week at 77½ bid.

The discount retailer is based in Commerce, Calif.

Telesat notes mixed

Telesat Canada LLC’s 6½% senior notes due 2027 (Caa1/B) rose about 1¾ points to 61¼ bid on Friday, a source said.

The issue was about 5¾ points lower on the week.

Telesat’s 4 7/8% senior secured notes due 2027 (B1/BB-) declined 2¾ points during the session to around 80 3/8 bid.

The Ottawa-based satellite communications company announced in November that subsidiaries Telesat Canada and Loral Space & Communications Inc. completed a merger with the company now publicly traded on the Nasdaq and Toronto Stock Exchange under the ticker “TSAT.”

Credito Real slides

Credito Real’s 8% senior notes due 2028 (B-/B-) traded Friday at 30 bid, down from around 50 bid on Monday, a source said.

“They’re suffering from a lot of ratings downgrades,” the source said. “Because of the news, people are panic selling.”

The issue ended 2021 at the 60 bid range.

Fitch said Wednesday its downgrade reflected the company’s slow progress in funding and liquidity plans for CHF 170 million due on Feb. 9.

S&P downgraded the company on Monday on higher refinancing risks with the large debt maturity due in the upcoming month.

Credito Real’s bonds were under pressure in 2021 after the Mexican consumer financing company reportedly revised its 2020 annual statement.

Distressed index softer

Distressed returns softened on Thursday, according to the latest market data.

The S&P U.S. High Yield Corporate Distressed Bond index’s one-day total return declined to minus 0.56% from 0.81% on Wednesday, minus 0.05% on Tuesday and minus 0.78% on Monday.

Month- and year-to-date index returns fell to minus 0.93% on Thursday versus minus 0.37% on Wednesday, minus 1.18% on Tuesday and minus 1.13% on Monday.

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