Chesapeake Energy, Transocean, Callon Petroleum, AMC gain; Frontier Communications flat

By Cristal Cody

Tupelo, Miss., Jan. 15 – Distressed issues from Chesapeake Energy Corp., Transocean Inc., Callon Petroleum Co., Wesco Aircraft Holdings, Inc. and AMC Entertainment Holdings, Inc. gained on Friday, while Frontier Communications Corp.’s bonds traded mostly flat.

Frontier Communications’ 11% notes due 2025 were steady at 54½ bid in light trading on Friday, a source said.

The company announced on Friday that it received approval from the Federal Communications Commission for its Chapter 11 bankruptcy restructuring.

The U.S. Bankruptcy Court for the Southern District of New York confirmed the company’s plan of reorganization in August. The company filed for bankruptcy on April 14, 2020.

Frontier expects to emerge from bankruptcy early this year and will have reduced its total outstanding debt by more than $10 billion.

The company said Friday it has regulatory approvals or favorable determinations for its required change-in-control applications as part of the restructuring from the FCC and 13 states. The company is awaiting approval in four states.

In other distressed secondary trading, AMC Entertainment Holdings’ bonds improved on Friday with the theater owner’s 10½% first-lien secured notes due 2025 (Caa2/CCC) quoted ½ point higher at 82½ bid.

Chesapeake notes rally

Chesapeake Energy’s 11½% senior secured second-lien notes due 2025 rallied on Friday to 31¼ bid and traded as high as 33½ bid earlier in the day, a source said.

The notes were seen in thin Rule 144A secondary volume on Thursday at 25¾ bid.

Chesapeake Energy’s plan to exit bankruptcy was approved on Wednesday with the company eliminating about $7 billion of debt under the reorganization.

The Chapter 11 bankruptcy case was filed on June 28 before the U.S. Bankruptcy Court for the Southern District of Texas.

Energy issues improve

Energy issues bucked lower oil prices and continued to mostly improve in secondary trading over Friday’s session, sources said.

Transocean’s 7½% senior notes due 2026 climbed 3 points on the day to 54 bid.

Also, a source saw the company’s 11½% senior notes due 2027 (Caa3/CCC) nearly 1½ points higher at 80 bid on Friday.

Callon Petroleum’s 6 3/8% senior notes due 2026 (Caa2/D) improved 2½ points over the day to 63½ bid.

Meanwhile, SESI, LLC’s 7¾% notes due 2024 gave back 3 points to trade at 33 bid after moving up 4 points in the prior session, according to a market source.

SESI is a subsidiary of Superior Energy Services Inc., which filed for Chapter 11 bankruptcy in December.

Oil futures turned sour on Friday after gaining on Thursday.

North Sea Brent crude oil futures for March deliveries fell $1.32 to settle at $55.10 a barrel.

West Texas intermediate crude oil for February delivery declined $1.21 to $52.36 a barrel.

Fitch Ratings said in a report on Friday that oil production will be among the sectors most severely affected by long-term ESG trends, second only to coal.

Elsewhere in distressed trading, Wesco Aircraft Holdings’ 13 1/8% senior notes due 2027 (Ca/CCC-) gained 2½ points to 85¾ bid on Friday, a source said.

Market tone remained soft over the day with stock indices down more than ½% headed into the weekend.

The iShares iBoxx High Yield Corporate Bond ETF fell 14 cents, or 0.16%, to close Friday at $87.11.

The S&P U.S. High Yield Corporate Distressed Bond index has a month- and year-to-date total return of 5.38% after closing Thursday up 0.92%.

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