Oil drops below $40, sector debt falls in sympathy; SunEdison, TerraForm bonds decline

By Stephanie N. Rotondo

Seattle, Nov. 20 – The distressed oil and gas space continued to be under pressure Friday as crude oil prices dropped nearly 3% to trade sub-$40 a barrel.

The weakness was due at least in part to a stronger dollar.

Chesapeake Energy Corp. – a name that has been retreating for weeks now – was “getting drummed, but not too bad,” a trader said.

The trader said the 6 5/8% notes due 2020 fell just over a point to 47½, as the 7¼% notes due 2018 weakened just half a point to 58½.

The trader also saw the 4 7/8% notes due 2022 losing 2½ points, closing at 42.

Another market source placed the 6 5/8% notes at 47 bid, down over a deuce.

“I think the longer-dated bonds were down a few points; the shorter end didn’t move too much,” another trader said.

He saw the 4 7/8% notes at 42 and the 6½% notes due 2017 in a 73 to 74 context.

He placed the 3¼% notes due 2016 at 94 bid, 95 offered.

But it was Halcon Resources Corp. that saw the bigger losses.

A trader said the 8 5/8% notes due 2020 declined 4 points to 77. The 9¾% notes due 2020 were off a like amount at 31¼, while the 8 7/8% notes due 2021 fell 3 points to 30 7/8.

The trader said the 9¼% notes due 2022 dipped nearly 2 points to 30¼.

A second trader said the 8 5/8% notes “traded down a few points,” to a 76 to 78 area.

Late Thursday, Halcon announced it was offering $390 of new 12% second-lien senior secured notes due 2022 for each $1,000 of 9¾%, 8 7/8% and 9¼% notes tendered.

The amount of new notes for old drops to $370 if tendered after the early deadline.

The exchange is only available to “qualified institutional buyers.”

SunEdison razed

As has been the case of late, SunEdison Inc.’s convertibles “continued to stay active,” according to a trader.

At mid-afternoon, the trader said that about $20 million of the renewable energy company’s convertibles had traded, all continuing on their downward trajectory.

One of the more active issues was the 2.625% convertible notes due 2023, the trader said. He pegged that issue at 25.

“It came at par in May,” he said of the issue.

The trader also noted that the 6.75% $1,000-par series A perpetual convertible preferred shares were also trading around 25. The $650 million deal came in August.

“Both are down 75% [since issuance],” the trader remarked. “That’s impressive.”

SunEdison’s equity also remained actively traded and weaker, though the decline was less than that seen in previous sessions.

The paper closed at $2.82, down 4 cents, or 1.4%.

Meanwhile, TerraForm Power Inc. – one of SunEdison’s yieldcos – saw its straight bonds trending downward as well.

A trader said the 5 7/8% notes due 2023 slipped almost a point to 68½. The 6 1/8% notes due 2025, however, lost nearly 4 points, ending at 65¾.

Greek bank bounces

National Bank of Greece SA’s $2.25 series A noncumulative preference shares (NYSE: NBGPA) were one of the day’s more actively traded issues, after it announced late Thursday that it had wrapped the book-building process on a private placement of new ordinary shares.

The preferred shares rose $1.70, or 22.22%, to $9.35.

In its announcement, the Greek bank said it had set the offer price for the new shares at €0.02 apiece, or €0.30 per share after a 15-to-1 reverse share split. The demand for the new issue, when combined with the results of a recent tender offer, are expected to result in proceeds of approximately €1.17 billion.

The bank also intends to launch a public offer in Greece for new shares, set at the same terms as the private placement. That offering is expected to bring in €300 million.

Those funds, combined with €3.08 million in new capital from the implementation of burden-sharing measures, are expected to more than cover a baseline capital shortfall of about €1.46 billion, the bank said.

© 2015 Prospect News.
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