Energy weakens as oil prices deteriorate further; Getty Images CEO to step down, bonds decline

By Stephanie N. Rotondo

Phoenix, March 13 – The distressed debt market was weighed down further Friday as oil prices continued to retreat.

“A lot of things are getting hit today,” a trader said.

The decline in prices came as the International Energy Administration warned that the U.S.’ supply glut remained a concern. That followed the U.S. Energy Information Administration’s report on Wednesday that showed supplies at an 80-year high.

West Texas Intermediate crude fell $1.89, or 4.02%, to $45.16 per barrel. Brent crude dropped $2.42, or 4.24%, to $54.66.

Among energy names, activity in Peabody Energy Corp. paper was popping, according to traders.

One trader said the $1 billion of 10% senior secured second-lien notes due 2022 – a deal priced March 5 at 97.566 – fell “a couple points” to 93½ bid, 94 offered.

Another trader said that issue declined nearly 2½ points to 94.

The second trader also saw the 6¼% notes due 2021 losing 1½ points to 69½, while the 6% notes due 2018 slid over 3 points to 84½.

Linn Energy LLC was also weaker, as a trader saw the 6½% notes due 2021 diving 4¼ points to 75.

Another market source placed the 7¾% notes due 2021 at 77¾, off 1¾.

SandRidge Inc.’s 7½% notes due 2021 then softened a deuce to 61¾ bid.

In Swift Energy Co.’s 8 7/8% notes due 2020, those were seen slipping half a point to 47.

And, Hercules Offshore Inc.’s 7½% notes due 2021 ended off 1½ points to 28.

Getty CEO to exit

Getty Images Inc.’s 7% notes due 2020 took a hit Friday as the company disclosed that its chief executive officer was stepping down.

“They continue to deteriorate,” a trader said, calling the issue off “a few more points” at 50.

Another trader said the debt dropped “almost 3½ points” to 51.

The Seattle-based stock photography provider said that Jonathan Klein would resign his position as CEO once his successor had been found. Klein would then stay on as chairman of the board.

Co-founder Mark Getty would meantime move into a deputy chairman position.

Getty is looking outside the company for its next CEO.

The company has been struggling amid a price war with other stock photography companies. Last month, the company reported a 7% decline in EBITDA for the fourth quarter.

On Tuesday, Standard & Poor’s dropped its rating on the company to B-, citing the weak earnings.

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