Distressed oil and gas bonds mixed as crude prices pop nearly 9%; iHeart paper trends downward

By Stephanie N. Rotondo

Seattle, Feb. 3 – It was a mixed day for distressed bonds as liquidity thinned, according to market sources.

“It was a slow day in distressed,” a trader said.

Investors continued to focus on commodities, particularly anything energy related, as domestic crude oil prices improved nearly 9% on the day.

Crude closed at $32.51 a barrel.

The gain in the price of oil came despite a fresh report from the Energy Information Administration that showed a surprising build of inventories. However, that news paled in comparison to assertions by Russian officials that it would agree to meet with OPEC and non-OPEC producers to discuss potential production cuts.

Additionally, Bloomberg reported that some analysts are predicting a rebound in oil prices by the end of the year.

In the distressed oil and gas space, a trader said there was “heavy volume” in Continental Resources Inc.’s 5% notes due 2022, which finished up over 2 points at 69½. The 4.9% notes due 2044, however, dipped a point to 54.

Whiting Petroleum Inc. paper was likewise mixed, the trader said. He saw the 5% notes due 2018 rising nearly half a point to 61¾, as the 6¼% notes due 2023 softened a similar amount to 58 5/8.

SandRidge Energy Inc. bonds were moving up on the day, despite news that the Oklahoma City-based company had laid off more employees.

One market source deemed the 7½% notes due 2021 almost 2 points higher at 4¼ bid. A second source said the 8¾% second-lien notes due 2020 were “active,” adding a deuce to close at 24.

On Wednesday, SandRidge axed 172 employees. When combined with the 226 employees laid off in January, the company has 440 fewer workers on its payroll than it did at the start of the year.

Power provider GeNon Energy was meantime trending down for the day, though there was no fresh news to act as a catalyst.

A trader saw the 7 7/8% notes due 2017 declining over 3 points to close at 74¾. Another source said the 9½% notes due 2018 dropped 4½ points to 66.

iHeart declines

A trader said iHeartMedia Inc.’s 10% notes due 2018 “seemed a little weaker” in midweek trading.

He placed the issue at 39.

Another trader called the issue off 1½ points at 39.

There was no fresh news out on the San Antonio-based multimedia company that would have caused the weakness.

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