Oil prices up on Yemen bombings; energy names improve; Cliffs bonds slip after deal prices

By Stephanie N. Rotondo

Phoenix, March 26 – The distressed debt market ended with a firm feel Thursday, even as the broader markets weakened on news that Saudi Arabia and its Arab allies launched a bombing campaign against Houthi rebels in Yemen.

Given Yemen’s key role in the region as far as oil goes, oil prices jumped up, which gave the energy space a boost.

West Texas Intermediate crude rose 2.3% in early trades, moving above the $50 mark. At the close, the price increased even more, finishing up $2.09, or 4.25%, at $51.30 per barrel.

Brent crude meantime gained $2.57, or 4.55%, to $59.05.

With those gains, energy names were gaining ground.

SandRidge Energy Inc.’s 7½% notes due 2021 ended up nearly 2 points to 64½. Linn Energy LLC’s 7¾% notes due 2021 closed up half a point at 81¼.

California Resources Corp.’s 6% notes due 2024 were also up, putting on almost a point to close at 88 3/8.

However, Transocean Ltd.’s debt did not fare as well as some of its sector peers.

The 6.8% notes due 2038 slipped a quarter-point to 72 1/8, while the 3.8% notes due 2022 weakened nearly a point to 73¾.

The 6 3/8% notes due 2021 held steady at 84¼.

But even with the day’s gains, a trader said there “wasn’t a ton of stuff going on.” With the way the market performed Wednesday, he “would have thought our stuff would have been weaker than it was. I don’t know if guys were putting money to work and then just backed off because of the way technicals were looking.”

Away from energy and new issues, Cliffs Natural Resources Inc.’s paper was coming in following the company’s successful pricing of a first-lien deal on Wednesday.

Cliffs’ debt subtly slides

After moving up in the previous session, Cliffs Natural Resources’ 5.95% notes due 2018 came in a little.

The debt had risen Wednesday as the Cleveland-based iron ore producer priced $540 million of 8¼% first-lien notes due 2020 at 93.243 to yield 10%.

One trader saw the 2018 paper fall to a 79 to 79½ context from levels around 80 on Wednesday. Another market source placed the issue at 79 3/8, off almost half a point.

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

On Thursday, Cliffs said that it was extending the expiration of its previously announced tender offer to 9 a.m. ET on Monday in order to coincide with the closing of a new asset-based credit facility and the first-lien notes.

The tender had been scheduled to expire on Wednesday.

Elsewhere in the iron arena, Magnetation LLC’s 11% notes due 2018 regained a point after getting beat down earlier in the week, according to a trader.

He saw the notes ending at 46½, up from a 44 to 45 context previously.

© 2015 Prospect News.
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