Distressed debt market wavers with broad market sell-off; Chesapeake, Denbury notes slip

By Stephanie N. Rotondo

Seattle, Jan. 4 – The distressed debt market was “still pretty muted,” a trader said Monday, as the equity markets tumbled to start the New Year.

“I don’t think our market was really as bad as the equities,” the trader noted.

In the broader markets, oil prices sold off after initially rising amid tensions between Iran and Saudi Arabia. Saudi Arabia is looking to impose sanctions on its neighbor after the Saudi embassy in Tehran was stormed on Sunday after Saudi Arabia executed a prominent Shiite cleric on Saturday.

Also weighing on the markets were the latest PMI figures from China, which contracted in the most recent month. The China stock market then fell about 7%, at which point trading was halted.

The weakness invaded the domestic markets, pushing the Dow Jones Industrial Index down over 1.5% for the day.

The volatility in oil pressured the already distressed energy sector.

A trader said Chesapeake Energy Corp.’s recently issued 8% second-lien notes due 2022 were “active,” but also off over a point at 47½.

The trader also saw the 5¾% notes due 2023 slipping half a point to 29.

At another desk, a trader pegged the 8% notes in a 48 to 49 context, deeming that “kind of where it was.”

Elsewhere in oil and gas, a trader saw Denbury Resources Inc.’s 4 5/8% notes due 2023 dip a shade to 32.

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