Vantage Drilling mixed; oil and gas names up with crude; Verso ends soft, CHC up pre-earnings

By Stephanie N. Rotondo

Phoenix, Sept. 3 – Distressed bond market activity continued to be subdued Thursday ahead of the Labor Day holiday.

One trader said it was “dreadfully” not busy.

“It was a slow-goer,” he said. “There just wasn’t a lot of activity.”

And while the marketplace did show signs of strength – the equity market and crude oil prices pared early gains, but still ended firm – there was little, if any, fresh credit-specific news out to move things around.

There was a little bit of follow-through in Vantage Drilling Co., which announced late Tuesday that Petrobras America, Inc. and Petrobras Venezuela Investments & Services BV had served it with a contract termination notice.

On that news, the offshore driller’s debt fell as much as 6 points on Wednesday.

On Thursday, the bonds were seen mixed.

A trader deemed the 7½% notes due 2019 “kind of unchanged” at 40½, though the 7 1/8% notes due 2023 weakened a quarter-point to 39 5/8.

Elsewhere in the oil and gas arena, Pacific Rubiales Energy Corp.’s 5 3/8% notes due 2019 traded “fairly active,” a trader said, ending up a touch at 56¾.

Chesapeake Energy Corp.’s 5¾% notes due 2023 meantime ended up “almost a point” at 75 3/8.

Even Halcon Resources Corp.’s 8 5/8% notes due 2020 were “rebounding” to 88¼, a gain of 1¼ points.

California Resources Corp. and SandRidge Energy Inc. were among the day’s biggest gainers. CRC’s 6% notes due 2024 closed up 2½ points at 76, as SandRidge’s 8¾% notes due 2020 improved almost 3 points to 69.

Verso slips, CHC inches up

Away from oil and gas names, Verso Paper Corp.’s 11¾% notes due 2019 were seen slipping a quarter-point to 30¼.

Avon Products Inc.’s 7.7% notes due 2043 were also a quarter-point softer at 77.

On the upside, CHC Helicopter Corp.’s 9¼% notes due 2020 inched up a touch to 60¾ ahead of the company’s earnings release on Tuesday.

A conference call will be held Wednesday.

Fannie, Freddie lose ground

Fannie Mae and Freddie Mac preferreds were initially moving up during the session on chatter the GSEs “might start entertaining the idea of retaining capital,” a trader commented. The mortgage giants have had the bulk of the profits conscripted by the federal government under amended terms of its conservatorship agreement since 2013.

The profit-taking has resulted in a slew of shareholder lawsuits, most of which allege the government acted illegally in taking most of the agencies’ quarterly earnings.

Fannie’s 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) were up 4 cents in early trading at $5.04, but ended off a nickel, or 1%, at $4.95. Freddie’s 8.375% fixed-to-floating rate noncumulative perpetual preferred stock (OTCBB: FMCKJ) were up 19 cents, or 3.89%, at $5.08, but finished losing a penny to close at $4.88.

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