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Distressed debt slightly better, but active issues in decline; commodities remain on the radar
By Stephanie N. Rotondo
Phoenix, May 27 – There was evidence of strength in the distressed debt market on Wednesday, but some of the more actively traded names bucked the trend.
Take Midstates Petroleum Co. Inc. A trader said both the 10¾% notes due 2020 and the 9¼% notes due 2021 on the busier side, but closing a few points lower.
He called the 10¾% notes off over 3 points at 49½ and the 9¼% notes down “almost 2 points” at 49.
Last week, the company concluded a series of transactions that added $420 million in liquidity to its coffers. The transactions included a $625 million private placement of 10% second-lien secured notes and an over $600 million debt exchange.
The debt exchange swapped $279.8 million of its 10¾% senior notes due 2020 and $350.3 million of its 9¼% senior notes due 2021 for $504.1 million of new 10% third-lien senior secured notes.
The third-liens also include a 2% PIK feature.
Also in the oil and gas realm, Lightstream Resources Ltd.’s 8 5/8% notes due 2020 were seen dropping 7 points to 71¼.
There was no fresh news out on the Canadian oil and gas producer, but the company did amend a credit facility last week.
Elsewhere in commodities, continued weakness in coal prices remained unfavorable for Peabody Energy Corp. bonds.
One trader saw the 6% notes due 2018 holding at 73, though the 10% notes due 2022 drifted down 1½ points to 77½.
The latter $1 billion issue priced at 97.566 on March 5.
At another shop, the 6½% notes due 2020 were pegged at 53¼ bid, down over a point on the day.
And in rare earth metals, MolyCorp Inc.’s 10% notes due 2020 softened a deuce to 44.
Away from losers in the commodity space, Verso Paper Corp.’s 11¾% notes due 2019 declined nearly 2 points to 72¼, according to a trader.
Those bonds have been trending mostly downward since mid-May, when the company released its quarterly results. The results showed a much wider loss, though that was mainly due to the incorporation of merger partner NewPage.
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