Morning Commentary: CDX opens 3/8 higher; distressed energy eyed; California Resources bonds rise

By Paul A. Harris

Portland, Ore., Dec. 17 – The high-yield market, having now coughed up the totality of its 2014 returns and dipped into negative territory, was seeing a modicum of stabilization at Wednesday’s open, traders said.

The CDX North American High Yield Index Series 23 was 104½ bid in the mid-morning, up 3/8 of a point.

However sellers were creeping in toward the mid-morning, the traders noted, and added that there was evidence that some investors were selling into market strength.

In the distressed energy sector buyers have stepped in, at least for the time being, according to a trader on the East Coast of the United States.

Crude oil prices remain volatile. However in the East Coast mid-morning the West Texas Intermediate barrel price was $55.75, off its highs, but up from the $54 per barrel at Wednesday’s open.

The closely watched California Resources Corp. 6% senior note due Nov. 15, 2024 was trading at 82½ bid, 83½ offered, up from Tuesday lows of 81 bid, 82½ offered.

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 and traded as high as 104½ bid in the immediate aftermath.

“It’s a big, liquid, high-quality energy name, and it truly has gotten whipped around,” the trader said.

“But there have been some buyers.”

Traders sounded a cautionary note with regard to the early Wednesday strength, as volatility remains high.

And the primary market continues to appear shuttered for the remainder of the year.

However the dealers are planning to get things done in January if we start to see any kind of stability, a trader said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.