Distressed oil and gas bonds slip ahead of data; Chemours’ debt moves higher; AMD down

By Stephanie N. Rotondo

Phoenix, Oct. 14 – The distressed debt market ended with a softer tone Wednesday, due in part to an oil and gas market that continued to lag.

For its part, domestic crude oil prices came in a touch during the session as the market waited to see what the latest weekly reports from the American Petroleum Institute and the U.S. Energy Information Administration had to say.

The API report was slated to be released after the market closed, and the EIA report was scheduled for Thursday.

Expectations were that both reports would indicate slowing demand amid increasing supply.

As for distressed bonds, that put pressure on the sector.

California Resources Corp.’s 6% notes due 2024 were deemed “very active” but a point weaker at 68. Another trader said the issue dropped 1½ to 2 points, ending with a 67 handle.

Chesapeake Energy Corp. was also lower, with a trader pegging the 5¾% notes due 2023 at 70½ and the 4 7/8% notes due 2022 at 70.

A second source saw the 6 5/8% notes due 2020 at 75½ bid, down nearly a point on the day.

In Linn Energy LLC paper, a trader said the 8 5/8% notes due 2020 were down a shade at 35. But another source called the 7¾% notes due 2021 off over a point at 32¾ bid.

Also on the downside were Comstock Resources Inc.’s 10% notes due 2020, which a trader saw falling 2½ points to 75.

But not all oil and gas names closed lower. A trader said Energy XXI Ltd.’s 8¼% notes due 2018 rose “almost 2 points” to 38 3/8, while Penn Virginia Corp.’s 7¼% notes due 2019 were “up big” at 29.

The trader noted that the latter issue had been trading in the low-20s just a week ago.

Chemours firms

Chemours’ bonds improved during the session, though there was no fresh news to act as a catalyst.

“The bonds were up a couple points, but I didn’t see any particular news,” a trader said.

A trader saw the 6 5/8% notes due 2023 moving up nearly 3 points to 73 7/8, as the 7% notes due 2025 gained a full 3 points to close at 72¾.

Last week, it was reported that private equity firm Apollo was considering making an offer for Chemours in a move aimed at consolidating the titanium dioxide industry. Apollo then hopes to approach other makers of the chemical such as Tronox.

Prior to that news, a federal jury in Ohio reportedly handed down a $1.6 million verdict against DuPont – the former parent of Chemours – in a case regarding allegations that DuPont had dumped a toxic chemical known as C-8, a key ingredient in making Teflon coatings for cookware and other uses, into the Ohio River from one of its plants in West Virginia, causing a number of people to develop crippling illnesses. The case is one of about 3,500 similar cases filed against DuPont by people claiming to have been sickened by the chemical.

But while the case went against DuPont, it is Chemours that could eventually be forced to foot the bill, as it now owns the plant where the dumping allegedly took place.

AMD earnings on tap

Advanced Micro Devices Inc. is expected to report its latest quarterly results after the market closes on Thursday.

Ahead of the earnings, the Sunnyvale, Calif.-based chipmaker’s bonds were weakening.

A trader said both the 7¾% notes due 2020 and the 7½% notes due 2022 were trading in a 64½ to 65 context. For the former issue, that was unchanged, though it was down about a point for the latter notes.

At another desk, a market source pegged the 7½% notes due 2022 at 65 bid, off a point.

Analysts polled by Thomson Reuters have forecast a loss per share of 12 cents on revenue of $995.87 million for the third quarter. For the same period of 2014, AMD reported adjusted earnings per share of 3 cents on revenue of $1.43 billion.

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