Talen bonds, CDS spreads weaken; Wesco trades flat to lower; Telesat paper stronger

By Cristal Cody

Tupelo, Miss., March 31 – Talen Energy Supply LLC’s notes slid about 4 points to over 6 points on Thursday, while its credit default swap spreads gapped out more than 5,200 basis points this week.

Oil prices settled flat to weaker after president Joe Biden announced plans to tap oil reserves to lower gas prices at the pump, with the White House calling the gas costs “Putin’s Price Hike.”

Biden intends to release an historic 1 million of additional barrels of oil on average daily for the next six months.

West Texas Intermediate crude oil benchmark futures for May delivery finished below $100 after soaring over March following Russia’s invasion of Ukraine, settling $7.16 lower at $98.52.

Measured market volatility was up nearly 7% as major stock indices declined over 1½%.

The Chicago Board Options Exchange’s CBOE Volatility index rose to 20.65.

The iShares iBoxx High Yield Corporate Bond ETF remained soft a second day, finishing 29 cents lower at $82.30.

Wesco Aircraft Holdings Inc.’s distressed bonds were unchanged to softer on Thursday after seeing heady trading in the prior session that sent the notes up about 5 points to over 13 points.

Telesat Corp.’s notes were mixed following a downgrade from S&P Global Ratings but trading about 1 point stronger on the week.

Talen bonds slide

Talen’s paper saw strong secondary action with $28 million of volume on Thursday, a source said.

Talen’s 6½% senior notes due 2025 (Caa2/CCC/CCC) were quoted at 22½ bid on $14 million of paper traded, about 6¾ points softer from Wednesday.

The issue dropped to as low as 20 bid during the session.

Talen’s 10½% senior notes due 2026 (Caa2/CCC/CCC) sank 9½ points in early trading to 20 bid before going out over 4 points weaker near the 25½ bid area. Volume hit $14 million.

Talen’s CDS spreads moved out over 5,200 bps to 15,906 bps in the past week ended Wednesday, a market source said.

The Woodlands, Tex., and Allentown, Pa.-based power company’s CDS spreads have widened over 11,700 bps since mid-February.

Wesco mixed

Wesco’s bonds were mixed in thin activity after seeing heady trading on Wednesday that sent the notes up about 5 points to over 13 points, according to a market source.

Wesco’s 8½% senior secured notes due 2024 (Caa3/CCC+) fell 1 point from where it last traded on Wednesday, going out at 67 bid.

The company’s 9% senior secured notes due 2026 (Caa3/CCC+) were mostly unchanged at the 67 bid area after moving up nearly 5 points on Wednesday.

The Fort Worth-based aerospace supplier, now doing business as Incora, reported on Tuesday that it has completed a comprehensive recapitalization that included a liquidity infusion of $250 million and a bond exchange that extended maturities.

Telesat mostly flat

Telesat’s notes were mixed on Thursday but ending the session about 1 point better on the week, a source said.

Telesat Canada LLC’s 6½% senior notes due 2027 (Caa1/CCC+) softened about ½ point to 48½ bid by the day’s end.

Telesat Canada’s 4 7/8% senior secured notes due 2027 (B1/B) traded flat on the day at 73 bid.

S&P said on Wednesday it downgraded the issuer and senior secured and unsecured debt ratings on weaker business conditions and noted the company’s outlook is negative.

The Ottawa-based satellite communications company’s bonds have softened about 2 points to 3 points from mid-month after the paper climbed following a weak fourth-quarter earnings report.

Distressed returns up

The S&P U.S. High Yield Corporate Distressed Bond index one-day total return rose to 0.86% on Wednesday, compared to minus 0.09% on Tuesday and minus 0.18% on Monday.

Month-to-date total returns improved to minus 1.82% from minus 2.66% on Tuesday and minus 2.57% in Monday’s session.

Year-to-date index returns were better Wednesday at minus 5.11% versus minus 5.92% on Tuesday and minus 5.83% on Monday.

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