NGL, Shelf Drilling, Peabody Energy, HighPoint notes active; Frontier, AMC bonds better

By Cristal Cody

Tupelo, Miss., March 15 – Energy bonds in the distressed secondary market headed out Monday mostly softer as oil futures declined.

Market tone was mixed with equities positive and the high-yield space eking out gains.

The iShares iBoxx High Yield Corporate Bond ETF rose 1 cent to $86.47.

The S&P U.S. High Yield Corporate Distressed Bond index ended Friday with a month-to-date total return of 3.46% and a year-to-date total return of 17.97%.

Oil futures remained soft on Monday.

West Texas intermediate crude oil for May deliveries fell 22 cents to settle at $65.39 a barrel.

North Sea Brent crude oil futures for May deliveries settled down 34 cents from Friday at $68.88 a barrel.

In the secondary market, offshore driller Transocean Ltd.’s 9.35% notes due 2041 (C/CCC-/) traded up more than 1½ points to the 57 bid area, a source said.

Meanwhile, NGL Energy Partners LP’s 7½% senior notes due 2026 (Caa1/CCC+) fell more than 1 point to trade just over 85 bid on Monday, a source said.

Shelf Drilling Holdings Ltd.’s 8¼% senior notes due 2025 (Caa3/CCC+) also softened ¾ point over the day to 77 bid, according to a market source.

The company priced $310 million of new 8 7/8% senior secured notes due 2024 on Friday.

Peabody Energy softens

Coal producer Peabody Energy Corp.’s 6 3/8% senior secured notes due 2025 (Caa1/CCC-) fell to 44¾ bid on Monday after trading in the 46 bid range in the prior week, a market source said.

The company’s notes were mixed on Monday after it announced the results of a cash tender offer on $22.5 million of its 8½% notes due 2024 that expired on Friday.

In January, Peabody Energy completed a distressed exchange of its 6% secured notes due 2022 for new 10% secured notes due 2024 and 8½% secured notes due 2024.

The company emerged from a Chapter 11 bankruptcy restructuring in 2017.

HighPoint notes drop

HighPoint Resources Corp.’s notes were mixed in distressed secondary trading on Monday, a day after the company announced it had filed for Chapter 11 bankruptcy.

HighPoint’s 7% senior notes due 2022 (C/C/) saw heavy trading over the session, from 60 bid early in the day to 54 bid by late afternoon, a source said.

The notes headed out Friday at 62¼ bid.

The natural gas and oil exploration company’s 8¾% notes due 2025 (C/C/) were not active over the day.

On Monday, Moody’s Investors Service dropped HighPoint’s probability of default rating to D-PD from C-PD.

Highpoint said in a news release on Sunday that it filed in the U.S. Bankruptcy Court for the District of Delaware to begin its previously announced pre-packaged plan of reorganization and merger plan with Bonanza Creek Energy, Inc.

The company announced in November that it agreed to merge with Bonanza Creek Energy in a debt-for-equity exchange transaction valued at about $376 million.

The companies had reported plans to hold a registered exchange offer and consent solicitation and simultaneous solicitation of a pre-packaged plan of reorganization under Chapter 11 bankruptcy for the merger.

If the minimum participation condition on the exchange was not met, HighPoint noted it would file for Chapter 11 bankruptcy to execute the pre-packaged plan and complete the merger.

The conditions to Bonanza Creek’s exchange offer for the 7% and 8¾% notes were not met at the offer’s expiration date on Thursday, though a majority of holders of HighPoint’s notes and its stock voted to accept the pre-packaged plan, according to news releases on Friday.

A special HighPoint shareholders meeting was held on Friday to approve the merger and pre-packaged plan.

HighPoint previously reported the merger with Bonanza Creek would close in the first quarter under the exchange offer and consent solicitation or no later than the second quarter under the pre-packaged plan.

Frontier bonds better

In other distressed secondary trading on Monday, bankrupt Frontier Communications Corp.’s 7 5/8% notes due 2024 were up 2¼ points at 65¼ bid, a source said.

The company’s 10½% notes due 2022 also added ¼ point to hit 68 bid in strong secondary supply.

Frontier plans to emerge from Chapter 11 bankruptcy early in 2021.

The company announced in January that it received approval from the Federal Communications Commission for its restructuring.

The U.S. Bankruptcy Court for the Southern District of New York confirmed the company’s plan of reorganization in August.

AMC notes higher

AMC Entertainment Holdings, Inc.’s 12% second-lien senior secured notes due 2026 (Ca/C) also were higher on Monday and headed out up more than 2 points at 86¼ bid, according to a market source.

Secondary volume was strong with $18.5 million of the bonds traded over the day.

The 12% notes, along with other bonds from the distressed movie theater owner, have rallied year to date. The 12% notes traded at the start of the year at 27 bid.

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