Recovering from Friday’s dip, the high yield market turned slightly positive this morning as investors digested increases in COVID-19 cases across the country and some states rolled back reopening plans and tightened social distancing standards over the weekend, according to two buysiders and a sellsider. 

California, Texas and Florida ordered bars to close over the weekend after those states saw spikes in coronavirus cases over the last week. Georgia also joined the list of states that have experienced a surge in cases after reopening.

The CDX North American HY Index was slightly positive this morning, opening up by 0.12 points and then reversing its gains mid-day, dropping 0.39 points, according to a sellsider.

Moving in tandem with the overall market, Delta Air Lines’ USD 1.25bn 7.375% senior unsecured notes due 2026 last inched up today to trade at 97.5 to yield 7.937% from trades at 96.53 to yield 8.161% on Friday (26 June), according to MarketAxess. 

Also propping up the market this morning was Boeing, as its stock climbed after the plane maker received clearance from the Federal Aviation Administration to begin test flights of its 737 Max jet, according to two buysiders. 

Tests can begin as soon as today (29 June) for the jet, which has been grounded since March 2019 following two plane crashes within the span of five months. 

Boeing’s stock traded at USD 183 per share this morning, up 7.6% from previous close, for a market cap of 103.2bn. Its USD 650m 3.1% notes due 2026 inched up to 102.397 for a 2.642% yield this morning from 101.993 on 24 June, according to MarketAxess.

Occidental Petroleum’s new triple-tiered USD 2bn unsecured bond offering traded heavily in the secondary market this morning, said two traders. The company issued the new bonds to fund a tender of near-term bond maturities – most importantly the USD 1.25bn 4.1% unsecured notes due 2021. 

The company’s USD 1bn 8.875% senior unsecured notes due 2030 traded on USD 213m in volume this morning at par, according to MarketAxess. The company sold the bond via Citi on Friday (26 June). Occidental’s USD 500m 8.5% senior unsecured note due 2027 traded to 99.75 from 99.5 while its USD 500m 8% senior unsecured note due 2025 traded at par from 99.5, said the first trader. 

Following last week’s bond offer, the company announced this morning that it was increasing the tender offer to USD 2bn from USD 1.5bn, which will further help the company whittle away at the USD 11bn maturity wall coming due over the next 24 months, said the second trader. 

“Last week’s bond issue showed a clear path for the company,” said the trader. “Pushing out that maturity wall is not exactly a lay-up, but the market isn’t requiring liens right now.”

The debt load stems from Occidental’s 2019 purchase of Anadarko Petroleum. Occidental shares traded down almost 2% this morning to USD 17.40 per share with a market cap of USD 16bn.

While Occidental finds a way through the wilderness, Chesapeake Energy did not and landed in the US Bankruptcy Court for the Southern District of Texas over the weekend. The company’s USD 623m 7% senior unsecured notes due 2024 strengthened on news of the filing this morning, to 4.5 from 3.5, said a trader. 

The company filed with nearly USD 9bn in debt, pushing the corporate default rate to the crucial 5% barrier that Fitch Ratings forecast for the month of June. Corporate default rates haven’t been that high since July 2016 and the energy sector is expected to weather a grueling 17% TTM default rate in 2020, only slightly lower than the 19.7% TTM default rate in July 2017.

2020 Debtwire