Nabors flat; Shelf Drilling, Transocean, Diamond Offshore drop; CBL notes improve

By Cristal Cody

Tupelo, Miss., March 22 – Oil and gas bonds traded mostly flat to softer in the distressed secondary space on Monday as oil prices edged higher.

Oil and gas drilling contractor Nabors Industries Inc.’s 5¾% senior notes due 2025 (Caa2/CCC-) traded heavily during the session following strong secondary volume on Friday, a source said.

The notes were unchanged by late afternoon at 78 bid after softening over the prior week. In the same session a week ago, the notes were quoted at 82¾ bid.

Shelf Drilling Holdings Ltd.’s 8¼% senior notes due 2025 (Caa3/CCC+) fell 1¼ points to 73 bid in light trading, a market source said.

Offshore driller Transocean Inc.’s 11½% senior guaranteed notes due 2027 (Caa3/CCC) also declined 1½ points to 87¼ bid in thin secondary supply.

Oil prices were slightly better over the day.

West Texas intermediate crude oil futures for May deliveries increased 13 cents to settle at $61.55 per barrel.

North Sea Brent crude oil futures for May deliveries rose 9 cents to settle at $64.62 a barrel.

Overall market tone stayed positive at the start of the week as stocks rebounded.

The iShares iBoxx High Yield Corporate Bond ETF rose 33 cents, or 0.34%, to end at $86.37.

Diamond Offshore declines

Elsewhere in the distressed energy space, Diamond Offshore Drilling Inc.’s bonds were weaker in light trading following the company’s report that it posted a $67.16 million net loss for February, a market source said.

The Houston-based offshore oil and gas drilling contractor’s 4 7/8% notes due 2043 traded in the 18 bid range over the day after going out Friday at 19½ bid in heavy trading volume.

The notes traded in the same session last week at 26 bid.

Diamond Offshore filed for Chapter 11 bankruptcy in April 2020 in the U.S. Bankruptcy Court of the Southern District of Texas.

Hertz steady

Bankrupt car rental company Hertz Corp.’s 5½% notes due 2024 were mostly unchanged at 90¼ bid on Monday, a market source said.

The notes have improved from where the issue traded a week ago at 86¾ bid and have climbed about 15 points since the end of February.

Hertz filed a joint Chapter 11 bankruptcy plan of reorganization and reported it received a $4.2 billion buyout offer from Knighthead Capital Management, LLC and Certares Opportunities LLC earlier in March.

A hearing on the offer is scheduled for April 16 in the U.S. Bankruptcy Court for the District of Delaware.

On Friday, Hertz filed a motion with the court seeking to extend the plan filing period through July 30 and extend the period to solicit votes through Sept. 30.

The Estero, Fla.-based car rental operator filed for Chapter 11 bankruptcy in May 2020.

CBL notes stronger

Meanwhile, bankrupt real estate investment trust CBL & Associates Properties Inc.’s notes were better on Monday following the company’s announcement that it plans to eliminate $1.6 billion of debt under a new restructuring plan, a source said.

The company’s 5¼% notes due 2023 traded higher at 52½ bid in strong secondary supply after heading out Friday at 48 bid.

CBL’s 5.95% senior notes due 2026 also jumped to 53¼ bid during the session, the market source said. The paper was seen trading in the 47½ area on Friday.

CBL and 176 affiliated companies filed for Chapter 11 bankruptcy on Nov. 1 and Nov. 2 in the U.S. Bankruptcy Court for the Southern District of Texas, Houston Division.

The Chattanooga, Tenn.-based owner and developer of malls and shopping centers announced on Monday that it has entered into an amended and restated restructuring support agreement with its credit facility lenders and unsecured noteholders.

Under the plan, more than $1.6 billion of debt and preferred obligations will be eliminated. In exchange, noteholders will receive cash, new senior secured notes and other debt and equity.

The company also received an extension to file and solicit votes on its restructuring plan, according to a court filing on Friday.

CBL has through May 31 to file the plan and through July 29 to solicit votes on the restructuring.

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