PBF recovers; Transocean gains; Talen mixed; Midas pushes higher; Diamond Sports up

By Cristal Cody

Tupelo, Miss., Aug. 27 – PBF Holding Co. LLC’s 9¼% senior secured notes due 2025 (Ba3/BB/BB) rallied 3½ points to 3¾ points in heavy trading on Friday as the paper moves toward exiting the distressed space.

Secondary volume was strong with $30 million of notes traded.

There also was some rebound in Transocean Inc.’s bonds during the session.

“They’ve been sloppy and probably bounced 4 points off their lows,” a source said.

Transocean’s 11½% senior guaranteed notes due 2027 (Caa3/CCC+) headed out about 5 points better from the start of the week.

Energy bonds mostly gained as crude oil prices climbed more than $1 over the session.

North Sea Brent crude oil futures for October deliveries settled $1.63 higher at $72.70 a barrel.

West Texas Intermediate crude oil benchmark futures for October deliveries added $1.32 to settle at $68.74 a barrel.

Overall secondary market action was “very quiet” on Friday, a source said. “We’re definitely pre-holiday.”

Primary supply in the high-grade and high-yield bond markets also has slowed this week and is expected to remain thin until after the Labor Day holiday.

In other distressed energy issues, Talen Energy Supply LLC’s notes were mixed but mostly unchanged on the week.

“Some of the speculative area of the market has come back a little bit,” a source said.

Bonds from Midas Intermediate Holdco II LLC, doing business as Service King, went out more than 10 points better from the prior week.

Diamond Sports Group LLC’s paper also traded about 2 points to 3¾ points better on the week following S&P Global Ratings’ downgrade early in the session.

PBF bonds rally

PBF Holding’s 9¼% senior secured notes due 2025 (Ba3/BB/BB) rallied 3¾ points to 97¼ bid and yielding just over 10% on Friday, a source said.

Secondary volume totaled $30 million.

The Parsippany, N.J.-based petroleum refiner’s notes have climbed about 9½ points week to date.

PBF’s 6% senior notes due 2028 (B3/B/) jumped nearly 5 points to 67 bid on $5 million of paper traded on Friday.

The notes were ending the week nearly 15 points better.

Also on Friday, PBF’s 7¼% senior notes due 2025 (B3/B/B+) traded nearly 3 points higher at the 71 bid area on over $4 million of secondary supply.

Transocean better

Transocean’s notes added about 1¼ to 2½ points over the session, sources said.

The Vernier, Switzerland-based offshore driller’s 7¼% senior notes due 2025 (Ca/CCC+) rose over 2¼ points to trade better than 80¼ bid on light volume totaling $2 million.

Transocean’s 11½ senior guaranteed notes due 2027 (Caa3/CCC+) went out stronger at 99 bid, par offered on Friday.

On Monday, the notes traded at 93 bid, 94 offered.

Transocean’s 6.8% senior notes due 2038 (C/CCC) also added over 1½ points to trade near 54 bid on over $5 million of secondary volume Friday.

Talen trades mixed

Talen’s paper was mixed with the 7¼% senior secured notes due 2027 (Ba3/BB-/BB-) down over 1 point to trade near the 87½ bid area on over $4 million of secondary volume during the session, a source said.

Talen’s 10½% senior notes due 2026 (B3/CCC/B-) rose about ¾ point to 42 bid, 43½ offered on Friday.

The Woodlands, Tex., and Allentown, Pa.-based power company’s notes were mostly unchanged on the week after softening mid-week.

Midas improves

Midas Intermediate Holdco II’s notes improved further on Friday after declining in the previous week, a source said.

The 7 7/8% senior notes due 2022 (Caa3/CCC-) issued by Midas Intermediate Holdco II and doing business as Service King rose over ½ point to 94¾ bid on more than $8 million of secondary volume on Friday.

The bonds have climbed more than 10 points since trading in the prior week at 82¾ bid and as low as 74½ bid.

The Richardson, Tex.-based auto body repair provider’s issue traded at the 95 bid area at the start of the month.

Diamond Sports gains

Diamond Sports Group’s 5 3/8% senior secured notes due 2026 (B2/CCC) headed out at 63 bid, 64 offered, about 3¾ points better on the week, a market source said.

The bonds traded at 60 bid, 61 offered on Monday.

Diamond Sports’ 6 5/8% senior notes due 2027 (Caa2/CC) climbed 1¾ points to 41 bid in thin trading during the session. The issue improved about 2 points over the week.

S&P said Friday it downgraded Diamond Sports and parent Sinclair Broadcast Group Inc.

Diamond Sports was dropped due to heightened concerns of a subpar debt exchange or redemption in the next year, actions S&P said it would view as tantamount to a default.

In June, Sinclair reported unsuccessful attempts to secure new funding for the Chesapeake, Va.-based sports broadcast group.

On Aug. 16, Sinclair announced that DISH Network Corp. dropped its broadcast and tennis TV stations, though S&P said Sinclair's stations are still being carried while negotiations continue.

Distressed returns stronger

Market tone ended the week higher as equities gained and oil prices improved.

The iShares iBoxx High Yield Corporate Bond ETF closed up 24 cents to $87.96.

Distressed index daily returns were positive over the first four sessions of the week.

The S&P U.S. High Yield Corporate Distressed Bond index total return was 0.44% on Thursday, 0.33% on Wednesday, 1.25% on Tuesday and 0.47% on Monday.

Month-to-date total returns improved to 0.23% on Thursday versus minus 0.21% on Wednesday, minus 0.54% on Tuesday and minus 1.77% at the start of the week.

Distressed year-to-date total returns were stronger Thursday at 24.18%, compared to 23.63% on Wednesday, 23.23% on Tuesday and 21.7% on Monday.

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