Distressed energy bonds improve; Transocean, Callon, Nabors, Diamond Offshore gain

By Cristal Cody

Tupelo, Miss., Feb. 8 – Distressed energy bonds climbed in secondary trading over Monday’s session as oil prices jumped more than $1.

Oil futures are closing in on market expectations of $65 a barrel.

North Sea Brent crude oil futures for April deliveries climbed $1.22 to settle Monday at $60.65 a barrel.

West Texas intermediate crude oil for March deliveries settled up $1.12 at $57.97 a barrel.

Offshore driller Transocean Inc.’s 8% senior notes due 2027 (Ca/CCC) traded 3 5/8 points higher at 56½ bid as the week kicked off, a source said.

Transocean Ltd.’s 9.35% notes due 2041 (C/CCC-/) headed out up 2¼ points at 45½ bid.

Callon Petroleum Co.’s 6¼% senior notes due 2023 (Caa2/D) were quoted 3 1/8 points better at 83 bid during the session.

Nabors Industries Inc.’s bonds also improved after heavy trading last week, a source said.

The oil and drilling contractor’s 5¾% senior notes due 2025 (Caa2/CCC-/CCC-) climbed another 2½ points on Monday to trade at 76¼ bid after rallying 4 points on Friday.

Nabors Industries Ltd.’s 7½% senior notes due 2028 (Caa1/CCC-/B-) also gained 2 points to 84½ bid on Monday.

Market tone was strong at the start of the week with major stock indices closing up more than 0.7%.

The iShares iBoxx High Yield Corporate Bond ETF improved 26 cents, or 0.3%, to end the day at $87.78.

The S&P U.S. High Yield Corporate Distressed Bond index finished Friday up 0.29% and with a month-to-date total return of 1.16% and a year-to-date total return of 9.7%.

Diamond Offshore improves

In other distressed secondary trading, bankrupt Diamond Offshore Drilling Inc.’s paper continued to improve on Monday, a market source reported.

The company’s 7 7/8% notes due 2025 climbed 1 3/8 points to 18 3/8 bid after gaining nearly 1 point on Friday.

Diamond Offshore’s 5.7% notes due 2039 rose ½ point to 17½ bid over the day after strong trading Friday saw the notes up almost 1 point.

Diamond Offshore, which filed for Chapter 11 bankruptcy in April, announced on Jan. 25 that it reached a restructuring agreement with more than 70% of the holders of its senior notes and revolving credit facility loans.

Chesapeake Energy Corp.’s bonds saw thin trading activity in the secondary market on Monday, a source said.

The energy company’s 8% senior notes due 2027 were unchanged after trading Friday up 3/8 point to 6½ bid.

The company is preparing to exit Chapter 11 bankruptcy following a $1 billion two-part sale of senior notes last week.

AMC bonds soften

Meanwhile, AMC Entertainment Holdings, Inc.’s 12% second-lien senior secured notes due 2026 (Ca/C) softened 7/8 point on Monday, heading out at 64 5/8 bid in distressed secondary trading, a source said.

AMC’s 10½ first-lien senior secured notes due 2026 (Caa2/CCC) traded at 99½ to 99¾ bid over the day in heavy supply, down from where the notes traded at the start of February at 101½ bid.

AMC’s bonds rallied in heavy trading in late January after the company announced additional funding.

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