Post-holiday distressed bond market quiet, energy issues seen mixed; miners better

By Paul Deckelman

New York, Jan. 19 – Traders in distressed debt saw a relatively quiet post-holiday session on Tuesday, in line with a calmer overall high yield bond market, which reopened following Monday’s market close for the Martin Luther King Jr. holiday.

Traders said that bond trading began the day on a firm note, in line with early gains in the equity markets, but then backed off its peak levels as stocks retreated around them middle of the session, only to come back to end the day somewhat higher.

All told, the traders said, things were a mixed bag.

In the energy space, crude oil prices were mixed on the day, with benchmark U.S. crude grade West Texas Intermediate falling to intraday lows below $28 per barrel not seen since September of 2003, before finally cutting their losses bust still ending down on the day, while international benchmark Brent crude firmed slightly on the day.

That pushed and pulled oil and natural gas bonds in every direction.

Among the higher finishers were credits such as WPX Energy Inc., Memorial Production Partners, LP, California Resources Corp. and EP Energy Corp.

But downsiders within the sector included Chesapeake Energy Corp., Concho Resources Inc. and, particularly Whiting Petroleum Corp.

In the convertibles market, WPX’s mandatory convertibles were sharply lower – though not as badly hit as the company’s shares.

Recently beleaguered iron-ore miners like FMG Resources PTY Ltd. and Cliffs Natural Resources Inc. were higher on the day.

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