Distressed debt finishes week firm; oil and gas bonds continue to climb; mining names also improve

By Stephanie N. Rotondo

Seattle, March 11 – The distressed bond market finished the week with a stronger tone, according to market sources.

“Things were grinding a little higher with what stocks were doing,” a trader said.

However, activity in the distressed space was bit subdued.

“There was some stuff trading, but there wasn’t really anything notable,” a trader said.

As for the broader market, its gains were attributed to rising oil prices, as well as continued reaction to the European Central Bank’s stimulus program, which was announced Thursday.

For its part, domestic crude oil rose 1.72% to $38.49 a barrel. On Friday, the International Energy Agency opined that oil prices had found a bottom and Baker Hughes reported another drop in active U.S. drill rigs.

That count came in at its lowest level in 75 years.

With oil’s rise, distressed oil and gas bonds were also climbing higher.

A trader said Chesapeake Energy Corp.’s 8% second-lien notes due 2022 were on the busier side, trading up “a couple points” to 54.

The trader said that California Resources Corp.’s 8% notes due 2022 were “up a couple points as well,” pegging the issue at 44.

At another shop, a source saw Chesapeake’s 6 5/8% notes due 2020 putting on nearly 3 points to close at 37 bid.

The source also deemed Linn Energy LLC’s 7¾% notes due 2021 over a point better at 5½.

Mining bonds were also gaining ground. In particular, iron ore producers were getting a boost, though iron prices have come back in since jumping 19% on Monday.

A trader saw FMG Resources Ltd.’s 9¾% notes due 2022 pushing up to “around 102.” Cliffs Natural Resources Inc.’s 8¼% notes due 2020 also popped, finishing at 84, he said.

A second source said FMG’s 6 7/8% notes due 2022 were 1½ points better at 84 bid.

Cumulus loan firms

Cumulus Media Inc.’s term loan B moved up in trading on Friday to 69 bid, 71 offered from 67 bid, 70 offered on the heels of the company’s release of fourth quarter results late in the prior session that beat analyst expectations, according to a trader.

For the fourth quarter, the company reported a net loss of $4.6 million, or $0.02 per share, versus net income of $3.36 million, or $0.02 per share, in the prior year.

Net revenue for the quarter was $308.8 million, compared to $329.2 million in the fourth quarter of 2014.

And, adjusted EBITDA for the quarter was $63 million, versus $90.4 million in the comparable period in the previous year.

Cumulus is an Atlanta-based radio broadcaster.

Sara Rosenberg contributed to this article.

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