Oil & gas bonds improve on OPEC+ compromise; Genworth droops on stalled China Oceanwide merger; Forum Energy rises on asset sales – Mid-Day Commentary

Oil and gas names saw an uptick today after Saudi Arabia and Russia reached a compromise on oil policy, maintaining output levels through February and delaying an increase until March.  

After failing to reach an agreement at Monday’s OPEC-plus meeting, the two sides are expected to complete the compromise today. While the deal restricts supply in the near term, investors see the compromise as a sign both sides are willing to work together to bolster oil prices.  

WTI crude rose 4.64% or USD 2.21 on the day to USD 49.83 per barrel, while Brent crude rose 4.25% or USD 2.17 to USD 53.26 per barrel.

Patterson-UTI Energy’s USD 350m 5.15% senior unsecured notes due 2029 traded today at 94 to yield 6.03%, up from trades at 92.5 to yield 6.265% yesterday (4 January) and 91.477 to yield 6.425% on 30 December, according to MarketAxess.  

The company’s stock traded today at USD 6.03 per share and a market cap of USD 1.132bn, up 11.35% from yesterday’s close. 

Talen Energy’s USD 610m 10.5% senior unsecured notes due 2026 traded today at 89.125 to yield 13.55%, up from trades at 88 to yield 13.87% on 17 December, according to MarketAxess. The USD 550m 6.5% senior unsecured notes due 2025 last traded at 82.04 to yield 11.85%, up from trades 81 to yield 12.18% on 23 December.   

Transocean’s USD 396m 7.5% senior unsecured notes due 2031 traded today at 38, up from trades at 36.75 yesterday (4 January) and 35.75 on 31 December, according to MarketAxess. The USD 687m 11.5% senior secured notes due 2027 traded today at 73.5 to yield 19.05%, up from 73 yesterday and 72.47 on 28 December.  

The company’s stock traded today at USD 2.58 per share and a market cap of USD 1.58bn, up 11.2% from yesterday’s close.  

Genworth’s debt ticked down after the company said yesterday that it and China Oceanwide Holdings have decided not to extend the 31 December 2020 end date in their merger agreement – first inked back in 2016. 

Genworth, instead, is focusing on a contingency plan comprising a potential partial IPO of the U.S. Mortgage Insurance business to address near-term liabilities.  

Its USD 659m 7.625% senior unsecured notes due 2021 traded today at 100.75 to yield 6.51%, down from trades at 101 yesterday and 101.75 to yield 5.266% on 14 December, according to MarketAxess. The 385m 4.8% senior unsecured notes due 2024 fell as low as 89.97 to yield 8.54% yesterday before recovering slightly to 90.75 to yield 8.23%, down from trades at 93.01 to yield 7.31% on 10 December.  

The company’s shares fell as low as USD 2.61 this morning from USD 3.80 on 31 December. Shares have since recovered slightly today to USD 2.80 and a market cap of USD 1.413bn.  

Forum Energy Technologies’ debt jumped yesterday (4 January) after the oilfield products company announced the divestiture of its ABZ and Quadrant valve brands to Anvil and Smith-Cooper International for USD 105m in cash. 

Based in Houston, Forum serves the drilling, downhole, subsea, completions and production sectors of the oil and gas industry. The sale increases Forum’s focus on drilling and completion activity. 

Forum’s USD 315.5m 9% senior secured convertible notes due 2025 shot up to change hands at 73.875 yesterday for a 17.52% yield compared to 67.5 yielding 20.02% at 1 December, according to MarketAxess.  

Common shares of the company are up 17.98% from New Year’s Eve closing price of USD 11.90 to trade at USD 14.04 with a USD 78.29m market cap. Following the announcement yesterday morning, its shares opened 6.3% higher at USD 12.65. 

2021 Debtwire

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