Oil and gas paper gyrates with crude prices; First Quantum remains firm; Avaya bonds drop

By Stephanie N. Rotondo

Phoenix, Oct. 9 – The distressed debt market was “still bouncing some,” a trader said Friday.

Domestic crude oil prices were also bouncing, which in turn caused some gyrations in oil and gas bonds.

West Texas Intermediate crude hit $50 a barrel in early trading, due in part to a weakening dollar and to increasing tensions in Syria. But the commodity gave up some of those early gains, even as a new report from Baker Hughes showed a sixth weekly decline in domestic producing rigs.

WTI closed at $49.56 a barrel.

Following that trend, Energy XXI Ltd.’s 11% notes due 2020 traded as high as 62½ before settling back in to 60½, according to a trader.

“That’s up on the day, but down from the highs,” he noted.

In oil and gas preferreds, Goodrich Petroleum Corp. was initially moving up but ultimately gave up its gains to close down on the day.

The 10% series C cumulative preferreds (NYSE: GDPPC) were up 30 cents, or 8.35%, early in the day, trading at $3.90. The shares finished at $3.53, which was off 7 cents, or 1.94%.

The 9¾% series D cumulative preferreds (NYSE: GDPPD) were meantime up a nickel, or 4.75%, at mid-morning at $3.60. Those shares closed down 17 cents, or 4.79%, at $3.38.

Elsewhere in the commodity realm, a trader said FMG Resources’ 9¾% notes due 2022 “keep moving up,” placing the issue at 99.

First Quantum Minerals Ltd.’s 7% notes due 2021 also remained on an upward track. The bonds began to gain strength earlier in the week when the company announced it aimed to reduce its debt load by $1 billion by the end of the first quarter of 2016.

In Friday trading, a trader deemed the issue up “another 5 points” at 77.

Even AK Steel Holdings Corp.’s 7 5/8% notes due 2020 were firming up, with a market source pegging the debt at 57¼.

That was a gain of over a point on the day.

Avaya bucks the trend

While the day – and the week – had a firm tone to it, there were some names that could not catch a break.

Avaya Inc. was one such name, according to a trader.

“Those continue to move lower,” he said of the 10½% notes due 2021. He saw the issue finishing “close to 40.”

The trader noted that the bonds had been trading around 42 at midweek and in a 44 to 45 ZIP code at the beginning of the week.

“A lot of stuff rallied this week, but that one went 5 points in the other direction,” he said.

There has been no fresh news out to drive the debt lower.

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