Energy sector helped by oil rally; Midstates amends revolver terms; Alpha Natural debt jumps

By Stephanie N. Rotondo

Phoenix, March 25 – A sizable gain in oil prices helped boost distressed energy names on Wednesday.

West Texas Intermediate crude gained $1.52, or 3.2%, to close at $49.03 per barrel for May delivery. Brent crude then improved $1.20, or 2.18%, to $56.31.

Midstates Petroleum Co. Inc.’s 9¼% notes due 2021 jumped a deuce to 54½, according to a trader. In addition to higher oil prices, the Tulsa-based oil and gas company said Wednesday that it had amended its revolving credit facility with SunTrust Bank, though it was able to confirm its borrowing base of $525 million.

The amendment included a change to the mortgage requirements underlying the indenture, increasing the amount of assets included in the agreement to 90% from 80%.

Seventy Seven Energy’s 6½% notes due 2022 also saw a decent gain, rising 2½ points to 43½.

Among other commodities, coal producer Alpha Natural Resources Inc.’s bonds ramped up nicely, though a trader said he didn’t see any news to act as a catalyst.

The trader said the 6% notes due 2019 closed up nearly 4 points at 27, while the 9¾% notes due 2018 improved 4½ points to 40¼.

Cliffs up as new deal prices

Cliffs Natural Resources Inc. priced $540 million of 8¼% first-lien notes due 2020 at 93.243 on Wednesday.

At that price, yield was 10%.

With the new deal, a trader said Cliffs’ 5.95% notes due 2018 saw “a fair amount of volume,” with the bonds putting on 1½ points to finish at 79¾.

The new deal came upsized from $500 million, while the yield was 100 basis points wider.

Proceeds will be used to pay off a revolving credit facility and for general corporate purposes.

Toys’ bonds rise

Toys “R” Us Inc. debt moved up as investors reacted to a presentation the company did on Tuesday.

In Wednesday trading, the 10 3/8% notes due 2017 were seen putting on over half a point to 87.

At another desk, the 7 3/8% notes due 2018 were deemed up 2½ points at 69½.

In its presentation, the Wayne, N.J.-based toy retailer said it made good headway in implementing its strategic plan in 2014, slowing a decline in sales and improving EBITDA.

However, the company did see a reduction in liquidity during the fourth quarter. Liquidity at the end of 2014 was $1.9 billion, including borrowing capacity of $99 million. By comparison, the company had $2.4 billion and $1 billion, respectively, at the end of the third quarter.

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