Washington Prime notes trade flat; Transocean, PBF soften; Consol, Peabody rally

By Cristal Cody

Tupelo, Miss., May 19 – Washington Prime Group, LP’s 6.45% notes due 2024 (C/D/C) traded mostly flat over Wednesday’s session following Fitch Ratings’ downgrade.

The 6.45% notes due 2024 (C/D/C) headed out unchanged at 61 bid, a source said.

The notes fell nearly 2 points in the prior session after Washington Prime Group Inc. reported in an 8-K filing with the Securities and Exchange Commission that its forbearance on a missed bond payment was extended to May 26. The forbearance agreement was set to expire on Wednesday.

Washington Prime Group disclosed in February that the operating partnership withheld a $23.2 million interest payment on the 6.45% notes that was due Feb. 15.

The 6.45% notes have declined from trading in the 73½ bid area in mid-February.

On Wednesday, Fitch said it dropped the issuer default rating to RD from C, noting the company’s multiple extensions of the initial forbearance agreement.

Fitch said it believes the only resolution of the company’s capital structure is through a near-term restructuring event or a potential bankruptcy filing.

On May 10, Washington Prime reported first-quarter net losses of $55.4 million, or $2.52 per share, compared to earnings of $3.4 million, or 16 cents per share, in the same period last year.

The Columbus, Ohio-based shopping center real estate investment trust said in the SEC filing that it continues to engage in negotiations and discussions with the forbearing noteholders and forbearing lenders to restructure its capital structure.

Transocean, PBF decline

Distressed oil and gas bonds softened over the session as oil prices sank.

North Sea Brent crude oil futures for July deliveries dropped $2.05 to settle Wednesday at $66.66 a barrel.

West Texas intermediate crude oil benchmark futures for June deliveries settled $2.13 lower at $63.36 a barrel.

Transocean Inc.’s bonds fell about 1¾ points to over 2 points on Wednesday, a market source said.

The Vernier, Switzerland-based offshore driller’s 6.8% notes due 2038 (C/CCC-/) were quoted down 1¾ points at 52 bid on more than $5 million of trading supply.

Petroleum refiner PBF Holding Co. LLC’s 6% senior notes due 2028 (B3/B+/B+) dropped more than 1½ points to the 75 bid range on $1.4 million of secondary volume.

Overall market tone remained soft on Wednesday.

The iShares iBoxx High Yield Corporate Bond ETF closed down 23 cents at $86.61.

Coal bonds higher

Distressed coal bonds traded mostly stronger on Wednesday and so far on the month, a source said.

Canonsburg, Pa.-based coal producer Consol Energy Inc.’s 11% second-lien notes due 2025 (Caa1/CCC) added 1½ points to 98¼ bid on $3 million of paper traded.

Consol’s issue has added about 3¼ points month to date.

St. Louis-based coal producer Peabody Energy Corp.’s 6 3/8% notes due 2025 (Caa1/CCC) were up 1 point at 57 bid and trading 4 points higher from the same day a week ago. The notes have climbed from 42 bid at the end of April.

Mallinckrodt down

Bankrupt pharmaceuticals maker Mallinckrodt plc’s 5 5/8% notes due 2023 traded Wednesday at 62 bid, 2 points softer than where the issue was last seen on Monday, a market source said.

Mallinckrodt has an upcoming hearing on the company’s Chapter 11 bankruptcy plan of reorganization and disclosure statement scheduled for May 26.

The company filed the plan and statement on April 20 in the U.S. Bankruptcy Court for the District of Delaware.

Mallinckrodt, which has principal offices in Dublin and St. Louis, filed for Chapter 11 bankruptcy on Oct. 12, 2020.

Endo notes soften

Elsewhere in the distressed pharmaceuticals space, Endo Finance LLC’s 6% senior notes due 2028 (Caa2/CCC+) fell 1¾ points to 72¾ bid on Wednesday, according to a market source.

The issue traded at the start of the year in the 88¼ bid area.

Parent Dublin-based pharmaceuticals maker Endo International plc reported weaker first-quarter earnings and revenue earlier in May.

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