Distressed bonds end week quietly, but activity in Caesars, energy credits like Chaparral

By Paul Deckelman

New York, Feb. 20 – The distressed debt market closed out a holiday-shortened week on Friday with no clear trend, traders said.

They did see some activity in selected distressed credits, including the bonds of Caesars Entertainment Corp., whose principal unit, Caesars Entertainment Operating Corp., is currently attempting to restructure its debts through the courts.

The latter unit’s most actively traded issue, its 10% notes due 2018, was seen lower in very active trading.

There was also a fair amount of trading in some of the recently battered energy issues, amid lower crude prices Friday.

Among them were Chaparral Energy Inc., whose bonds rose solidly in active dealings on Thursday. There was continued volume on Friday, with the bonds finishing up on the week.

Other active energy names included California Resources Corp., whose bonds were seen mixed on the day, though in relatively busy trading, and Linn Energy LLC.

In the coal space, traders saw some activity in Cliffs Natural Resources Inc.

Caesars bonds busy

A trader said that “Caesars continues to be an active name,” with “a lot of the 10% notes due 2018” trading around.

He said that the Las Vegas-based gaming giant’s issue had “decent volume” of over $15 million, hitting an intraday high between 18½ and 18¾ bid, only to come down from those peak levels later on.

He said that the bonds were ending somewhere around 17 3/8 bid, which he called about unchanged on the day.

However, another trader said that later in the day, the bonds slid by as much as 1 7/8 points to end at 15 7/8 bid.

A third trader also put the bonds at that lower late level.

Energy issues a mixed bag

Traders saw energy issues trading around, but with no clear direction, after data came out showing U.S oil producers cutting their activities less than initially feared, as indicated by a smaller-than-expected decline in the number of drilling rigs in operation.

Meantime, the benchmark U.S. crude oil was down 82 cents at $50.34. Friday was the last day of trading for the March forward contract.

As usual, the most actively traded energy credits were California Resources Corp.’s three series of bonds.

A trader saw the Los Angeles-based oil exploration and production company’s benchmark 6% notes due 2024 ease about 1/16 point to 90 1/8 bid, with over $54 million traded.

He saw its 5½% notes due 2021 up 7/8 point at 92½ bid on more than $26 million of volume and saw its 5% notes due 2020 down nearly ½ point at 92¾ , with over $19 million changing hands.

Elsewhere in the energy patch, traders noted the busy activity in Chaparral Energy, whose 8¼% notes due 2021 had firmed to around 76 bid in robust trading. On Friday, a trader saw the bonds unchanged at that level, with over $12 million changing hands.

A second trader said the company’s bonds were up by 1½ points over the past two sessions – and were well up from the 65-66 context at which they had been sighted towards the end of last week.

Linn Energy’s 6½% notes due 2021 were down about 3/8 point at 84 7/8 bid, on volume of over $10 million.

In the coal space, a trader saw Cliffs Natural Resources’ 4 7/8% notes due 2021 down 1 point at 71 bid 73 offered, with “a couple of million traded.”

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