Distressed bonds trade thin as grace periods to expire, coupons coming due; Intelsat debt ends firm

By Stephanie N. Rotondo

Seattle, March 14 – It was a “kind of a sleepy day” in the distressed debt market on Monday, a trader said.

“There was a scarce amount of distressed [issues] trading,” he added, noting that Anadarko Petroleum Corp. made up the bulk of high-yield trading.

For its part, Anadarko priced a three-part offering of senior notes during the session. Leading up to pricing, investors were jockeying around in the older issues.

“It didn’t seem like anything was all that active,” another trader commented. “Maybe everybody is tired from losing that hour of sleep (from Daylight Saving Time).”

However, there could be another explanation, he conceded. Tuesday is the 15th of March, a day when several companies – a fair chunk of which are in the oil and gas space – will see their grace periods expire. Other companies will have coupons due.

“It could be interesting,” the trader said of the coming session, speculating that the market could see a string of bankruptcy filings or missed coupons.

As such, investors could be sitting on the sidelines, waiting to see what Tuesday will bring.

Intelsat rises

Intelsat SA bonds were ticking up in Monday trading, according to market sources.

“Those levels crept up a little bit,” a trader said.

He said the shorter maturities, such as the 6¾% notes due 2018, gained “close to 5 points,” ending in the mid-70s.

“The others are probably up about a point,” he said.

At another desk, a trader said the 5½% notes due 2023 inched up almost half a point to 65 7/8, while the 7¼% notes due 2020 rose 1¼ points to 71.

“They are obviously trying to get that amendment done,” the first trader said, noting that the recent gains in the name could be due to “optimism that something gets done.”

On Feb. 29, the Luxembourg-based satellite services provider said in a regulatory filing that it was seeking an amendment on its senior secured credit agreement. The amendment would allow, among other things, second-lien pledges by the parent organization over the capital stock of Intelsat Jackson. The proposed amendment also includes technical changes confirming Intelsat Jackson’s existing ability to refinance term loans under the credit agreement at certain times with other first lien debt.

Additionally, the proposed amendment provides that, if Intelsat Jackson raises at least $450 million of gross cash proceeds of first-lien debt, the revolving credit commitment under the credit agreement will be reduced to $350 million.

Energy sector mixed

In the oil and gas arena, bonds were mixed as domestic crude oil retreated.

Crude prices fell about 3% on Monday to $37.34 a barrel. The weakness was attributed in part to profit-taking from the commodity’s recent run up, as well as concerns that a proposal between OPEC and non-OPEC producers to freeze production at January levels would never materialize.

Of the day’s dealings, a trader said Continental Resources Inc.’s 3.8% notes due 2024 fell a point to 77 1/8. SandRidge Energy Inc. was also weaker, its 8 1/8% notes due 2022 slipping over half a point to 5¼.

Of the latter issue, the trader said the paper was “pretty active, for them.”

Meanwhile, Clayton Williams Energy Inc.’s 7¾% notes due 2019 were seen losing a point to close at 41.

“You rarely see that one,” a trader said.

Whiting Petroleum Corp.’s 5¾% notes due 2021 meantime ended the day unchanged at 65 ¾, according to a trader. The trader said Memorial Productions Partners LP’s 7 5/8% notes due 2021 were also steady, ending at 27½.

On the upside, Linn Energy LLC’s 8 5/8% notes due 2020 finished the day over half a point higher at 5 7/8.

© 2015 Prospect News.
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