Distressed bond trading muted as new issues eyed; oil-related names falter ahead of looming storm

By Stephanie N. Rotondo

Seattle, Oct. 6 – The distressed debt market again saw muted activity on Friday, as recent new high-yield issues continued to dominate.

“Away from that, there weren’t a lot of real active movers,” he said. “It was just a quiet Friday before a holiday. You’re not going to see a lot of price moves unless there is a catalyst.”

Overall, there was a somewhat softer feel to the market, as a weak jobs report made investors a bit skittish.

The Bureau of Labor Statistics said that 33,000 jobs were lost in September, though the unemployment rate fell to 4.2%, its lowest level since February 2001.

The market had been expecting the unemployment rate to hold steady at 4.4%, while nonfarm payrolls were expected to increase by 80,000.

The recent spate of hurricanes that have battered the southern portion of the country were partly blamed for the job losses.

As for secondary trading, Navios Maritime Partners LP’s 7 3/8% notes due 2022 slipped a shade to 81 7/8, according to a trader.

Another source saw California Resources Corp.’s 8% second-lien notes due 2022 waning 1¼ points to 63¼.

Oil-linked bonds were certainly heavy on Friday, as domestic crude oil prices fell nearly 3% – falling under the $50-mark again – as Tropical Storm Nate entered the Gulf of Mexico and threatened to hit hurricane status.

Despite the day’s downward trend, there were a couple of names that managed to trend higher, even without any news to act as a catalyst.

Petsmart Inc.’s 5 7/8% notes due 2025, for instance, traded up “almost a point” to 88, a trader said.

Another trader said that Windstream Holdings Inc.’s bonds were “continuing to creep higher.”

The trader said the 7¾% notes due 2020 added “about a point” to end around 86½.

He noted that the longer-dated issues were “moving a bit higher as well,” trading up to the mid-70s.

Another trader saw the 6 3/8% notes due 2023 ending half a point better at 75¾.

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