Morning Commentary: California Resources bonds track crude prices lower in ‘extremely quiet’ market

By Paul A. Harris

Portland, Ore., Jan. 2 – Junk was “extremely quiet” in the New York mid-morning on Friday in the first market session of 2015, according to a trader.

However, the continued decline in crude oil prices – with the West Texas Intermediate barrel price at $52.70, down from $54.12 on Dec. 30 – was having an impact, the source said.

There was some trading in the closely watched California Resources Corp. 6% senior notes due Nov. 15, 2024, which was 84¼ bid, 84½ offered in the New York mid-morning, down from 86 bid, the last print of 2014.

Late in the old year the bonds traded in the very low 80s before rallying to as high as 88 bid.

The $2.25 billion deal priced at par in a massive $5 billion amount of issuance that came in three bullet tranches (Ba1/BB) on Sept. 11.

The securities traded as high as 104½ bid in the immediate aftermath.

All quiet in the primary

Elsewhere Friday morning, there were very few market participants at their desks, the trader said.

The new year got underway with no announced new deal calendar.

Nor were there any hints as to what new issue activity might be in store for next week, when players in the high-yield market are expected to resume their stations.

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