Transocean firms on Songa Offshore buy; Murray dives post-earnings; Paperworks’ debt takes a hit

By Stephanie N. Rotondo

Seattle, Aug. 15 – A trader said there was “not bad volume” in the overall high-yield bond market on Tuesday, though he noted that most of the activity was centered on new issues and not distressed debt.

Still, there were some notable names in the distressed arena.

Transocean Ltd., for instance, saw its 6.8% notes due 2038 rising a point to around 75½, a trader reported, on news Transocean was acquiring Songa Offshore SE.

The deal – valued at $3.38 billion, including the assumption of debt – is “supposed to be accretive” to earnings, the trader said.

Transocean will conduct a voluntary exchange offer as part of the deal. It is expected that the acquisition will be funded with $480 million in cash, $540 million in equity and $660 million in convertible debt.

The deal is expected to close in the fourth quarter.

Meanwhile, Murray Energy Corp.’s 11¼% notes due 2021 “got whacked” on the back of its second-quarter results, according to a trader.

The trader deemed the debt down 5 points to 70 3/8.

As the St. Clairsville, Ohio-based mining company is private, those numbers were not widely available.

PaperWorks Industries Inc.’s 9½% notes due 2019 also took a hefty hit in Tuesday trading, though it was not clear why.

One trader said the name is “a little bit volatile” on its own.

Like Murray, the Bala Cynwyd, Pa.-based paper company is private, so news can be hard to come by.

At any rate, the trader saw the notes taking an “8 points and change” hit to close at 64¼.

The trader noted that the paper had been trading around 73 just a week ago.

Elsewhere in the distressed realm, there continued to be a focus on recently topical names.

Frontier Communications Corp. was one such name. A trader said its bonds finished the session in mixed fashion.

He pegged the 11% notes due 2025 at 86¾, which he called down 1¼ points on the day. However, the 10½% notes due 2022 were deemed unchanged at 91.

Petsmart Inc. was similarly mixed. Its 7 1/8% notes due 2023 were seen “up a tad” at 86¼, while its 8 7/8% notes due 2025 slipped a quarter-pint to 88½.

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