Diamond Sports rises; PBF Energy gives back gain; China Evergrande sell-off continues

By Abigail W. Adams

Portland, Me., Sept. 3 – The already light volume in the distressed debt secondary space was reduced to a crawl on Friday with the highly anticipated nonfarm payrolls report doing little to move the market.

While some distressed debt names benefited from the thin liquidity of what is widely considered the last full week of summer, others did not.

After a strong rally the previous week, PBF Holding Co. LLC’s junk bonds gave back some of their gains and closed the week lower.

However, Diamond Sports Group LLC’s 5 3/8% senior secured notes due 2026 closed the week with gains.

Meanwhile, the sell-off in China Evergrande Group’s junk bonds continued on Friday as the market braces itself for the company to default on its debt.

PBF gives back gains

After a strong rally over the past two weeks, PBF Energy’s junk bonds were giving back some of their gains on Friday.

The 9¼% senior secured notes due 2025 fell 2 points to close the day at 92¾, according to a market source.

The petroleum refiner’s 7¼% senior notes due 2025 also fell 2 points to 64½ in light volume.

The 6% senior notes due 2028 continued to trade on a 61-handle after falling about 4 points the previous session.

PBF Energy’s junk bonds saw a strong rally heading into the week with the 9¼% notes jumping almost 7 points to trade up to a 97-handle and the 6% senior notes trading up to a 67-handle due to an anticipated revision of biofuel blending mandates.

However, the notes were giving back their gains with the destruction wrought by Hurricane Ida to the company’s refineries outweighing the benefits of higher gasoline prices due to supply chain disruptions.

It may take weeks for PBF’s oil refineries in Louisiana to resume operations, which is expected to cost the company tens of millions of dollars in lost revenue, Reuters reported.

Diamond Sports gains

Diamond Sports’ 5 3/8% senior secured notes due 2026 closed the week with gains amid light liquidity in the secondary space.

The 5 3/8% notes continued to trade in the 67¾ to 68 context on Friday, a level reached the previous session.

The 5 3/8% notes gained almost 3 points on the week.

While less active, Diamond Sports’ 6 5/8% senior notes due 2028 also rose more than 3 points on the week.

They closed Friday on a 43-handle.

The notes closed the previous week at 39¼.

Diamond Sports’ junk bonds have been on a downward spiral since June when parent company Sinclair Broadcasting announced efforts to reach a deal with investors to secure new funding to refinance its debt had failed.

China Evergrande down

The sell-off in China Evergrande’s junk bonds intensified on Friday as the market braces for the heavily indebted company to default.

China Evergrande’s 8¾% senior notes due 2025 dropped another 2½ points to close the day at 25¾.

The company’s 9½% senior notes due 2022 fell 3 3/8 points to 30 5/8.

The China-based real estate developer’s dollar-denominated notes have long been under pressure with the market anticipating a default.

However, those suspicions were validated on Monday when the company warned a default may be imminent.

The company has about $88 billion in debt with 42% maturing in a year, The Wall Street Journal reported.

© 2015 Prospect News.
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