Talen Energy Bonds Drop on Earnings Outlook, Debt Concerns

Talen Energy Corp. bonds sank after the closely held company gave investors a downbeat earnings outlook on Thursday and failed to quell speculation it’s considering debt reduction proposals that might harm the interests of some creditors.

The Woodlands, Texas-based utility’s $470 million 6.625% secured notes due 2028 declined 6 cents to about 84 cents on the dollar Friday, according to Trace data. Meanwhile, its roughly $607 million 10.5% senior unsecured notes due 2026 dropped almost 6.5 cents to 55.5 cents on the dollar.

During an investor call Thursday, management said Talen and its board have received various financing and liability ...