Hi-Crush losses mount; Hexion first-lien notes see losses; Pacific Drilling active

By Abigail W. Adams

Portland, Me., Oct. 24 – Trading volume in the distressed debt space on Wednesday continued to center on names that have been in focus for much of the week.

Hi-Crush Partners LP’s 9½% senior notes due 2026 saw its losses mount in high-volume activity on with the notes sliding 4 points after a disappointing earnings report earlier in the week.

After rebounding from last week’s lows, Hexion Inc.’s 6 5/8% first-lien senior notes due 2020 slid in active trading as its 9% second-lien senior notes due 2020 continued to decline.

Pacific Drilling SA’s 8 3/8% senior secured first lien notes due 2023 weakened slightly in active trading on Wednesday after the company secured a contract for drilling operations in Nigeria.

Hi-Crush mounts losses

Hi-Crush Partner’s 9½% senior notes due 2026 remained in focus during Wednesday’s session with the notes seeing steep losses in active trading.

The 9½% notes dropped 4 more points to close the day at 86, a market source said.

More than $34.5 million bonds were on the tape during Wednesday’s session.

The 9½% notes have been on the radar of distressed debt players with the notes struggling since pricing at par in late July.

While initially firming after reporting earnings on Monday, the notes dropped 2 points to close Tuesday at 90, sources said.

The company reported a large earnings miss and slashed its dividend by 50 cents on Monday.

The proppant and logistics service provider fell far short of the EBITDA expected by analysts.

The credit has “some hair on it,” a market source said. Distressed debt players have been eyeing the name with the sentiment the credit will crack.

More Hexion

Hexion remained in focus in the distressed space with the chemical maker’s first-lien notes dropping after a rebound early in the week.

The 6 5/8% first-lien notes slid about 1 point to 91 in active trading on Wednesday, a market source said. More than $18 million of the bonds were on the tape by the late afternoon.

While the 6 5/8% notes dropped in active trading last week, they recouped their loss to return to their previous levels after a group of second-lien note holders retained counsel for negotiations.

The 9% second-lien notes continued their decline on Wednesday although in light trading volume.

The notes dropped 2 points to close the day at 66½, a market source said. The notes were trading around 78 prior to last week.

News broke last week that 9% bond holders hired law firm Milbank, Tweed, Hadley & McCloy in anticipation of upcoming negotiations regarding the 2020 bonds, a market source said.

Pacific Drilling active

Pacific Drilling’s 8 3/8% senior secured first-lien notes due 2023 weakened slightly in active trading on Wednesday after the company secured a drilling contract in Nigeria.

The 8 3/8% senior notes were down about ½ point to close the day at 102 after trading as low as 101 1/8 during the session, a market source said.

The notes were active with more than $19 million of the bonds in play during Wednesday’s session.

Pacific Drilling announced Tuesday it had secured a contract for a drilling operation in Nigeria.

While the deal is expected to generate revenue for the company, which entered into Chapter 11 bankruptcy proceedings in 2017, the notes have trended downward since the announcement.

Pacific Drilling requested court approval for a letter of credit of $32 million from Credit Agricole last week to support the contract.

Pacific Drilling priced a $1 billion issue of the 8 3/8% notes at par in an oversubscribed deal in September with proceeds to be used to refinance its pre-bankruptcy debt.

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