Oil, gas sectors retreat as oil prices rebound; coal debt in slump; broad market finishes weak

By Stephanie N. Rotondo

Phoenix, Dec. 9 – The distressed debt market was again zeroing in on the oil and gas arenas Tuesday, with most names retreating even as oil prices improved modestly.

Goodrich Petroleum Corp.’s 8 7/8% notes due 2019 slipped a quarter-point to 56, a trader said.

However, a preferred stock trader noted that the name was rebounding during trading.

A market source said Goodrich Petroleum Corp.’s 9.75% series D cumulative preferreds (NYSE: GDPPD) was the most active of paying securities – though he noted that dividends could soon be stalled, given the issue’s recent downhill descent.

The shares ended the day at $8.95, up $2.60, or 40.94%.

The 10% series C cumulative preferreds (NYSE: GDPPC) were meantime up $3.21, or 48.78%, to $9.79.

The gains in Goodrich’s preferreds came as oil prices experienced a moderate rebound, the day after hitting a five-year low.

West Texas Intermediate crude oil rose 65 cents, or 1.03%, to $63.70 per barrel. Brent crude gained 56 cents to $66.75 per barrel.

Elsewhere in the space, Samson Investments Co.’s 9¾% notes due 2020 dropped 3 points to 50.

A trader remarked that Midstates Petroleum Co. Inc.’s 9¼% notes due 2021 were down a like amount – “3 and change points,” he said – at 55 5/8, in “quite active” trading.

On Monday, the oil producer said an agreement to sell its assets in the DeQuincy area in Louisiana had been terminated.

Also down a sizable amount were SandRige Energy LLC’s bonds, according to a trader.

The trader said the 8 7/8% notes due 2022 fell a deuce to 62, while the 7½% noes due 2023 declined 3½ points to 63½.

Another market source deemed the 7½% notes due 2021 down 8 points at 59½ bid.

Coal names slump

Following the oil and gas trend, coal names were also lightening up on Tuesday.

A trader said Walter Energy Inc.’s 8 5/8% notes due 2021 dropped 3½ points from last week’s levels, closing around 20. The 11% PIK toggle notes due 2020 lost 2 points, ending around 36.

In Arch Coal Inc.’s debt, a trader said the bonds were all down about 2 points from last week, seeing the 7¼% notes due 2021 finishing at 32.

The 7% notes due 2019 meantime ended at 35½, as the 9 7/8% notes due 2019 closed at 38¼.

A trader then said that Alpha Natural Resources Inc.’s 6¼% notes due 2021 retreated 2½ points to 37.

Another source pegged the issue at 38 bid, down 2½ points.

Among other commodities, iron ore producer Cliffs Natural Resources Inc. saw its bonds moving up.

A trader said the 6¼% notes due 2040 improved a point to 56½. The 4 7/8% notes due 2021 put on 1½ points to end at 59½.

In the 4.8% notes due 2020, they were up just over a point at 60, the trader said. The 5.9% notes due 2020 popped by 4 points, closing at 63½.

Broad market dips

Away from commodity names, the market was trending toward the softer side.

A trader said Caesars Entertainment Corp.’s 10% notes due 2018 held steady at 14, though the 9% notes due 2020 fell 1½ points to 76½.

In the retail arena, Gymboree Corp.’s 9 1/8% notes due 2018 weakened by a point to 33½ and Claire’s Stores Inc.’s 8 7/8% notes due 2019 dipped over half a point to 79¼.

Meanwhile, Colt Defense LLC’s 8¾% notes due 2017 were seen falling 15 points from the last trades in mid-November, finishing the session around 37½.

The gun maker received a $70 million lifeline on Nov. 17 after warning of a potential default. While the additional liquidity allows the company to limp along for awhile, Colt warned that unless it meets upcoming sales targets, it might not be able to make a May 15 coupon payment.

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