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Distressed energy debt rises as crude oil prices near $50; Intelsat, iHeart bonds end higher
By Stephanie N. Rotondo
Seattle, May 25 – Rising oil prices were once again boosting distressed oil and gas bonds on Wednesday.
“Energy in general felt a touch better with oil prices moving higher,” a trader said.
For its part, domestic crude improved over 2% in midweek trading, edging ever closer to the $50 mark. The gains were due to a higher-than-expected drawdown of U.S. stockpiles.
In its report out Wednesday, the U.S. Energy Information Administration said crude inventories declined by 4.2 million barrels last week. Analysts polled by Reuters had forecast a decline of 2.5 million barrels, while American Petroleum Institute had predicted a 5.1 million draw.
In response, California Resources Corp.’s 8% second-lien notes due 2022 surged “a couple points” to 71½, according to one trader.
At another desk, a source pegged Chesapeake Energy Corp.’s 6 5/8% notes due 2020 at 64¾ bid, up almost 3 points for the day. Denbury Resources Inc.’s 6 3/8% notes due 2021 were seen rising almost 2 points to 68½ bid.
As for bankrupt Linn Energy LLC, its 7¾% notes due 2021 ticked up half a point to 15 bid.
Given that the company is in bankruptcy, that issue trades flat, or without accrued interest.
Intelsat, iHeart firm
Aside from oil names, a trader said that Intelsat SA bonds “kept creeping up a touch.”
He saw the 7¾% notes due 2021 trading as high as 30½.
The Luxembourg-based commercial satellite services provider is currently tendering for three series of notes maturing 2021 through 2023 linked to its Intelsat Jackson Holdings SA unit. The company will pay up to $625 million in cash for the notes.
Late last week, Intelsat extended the expiration date to June 14 from June 9. It also reduced the amount being offered for each $1,000 of notes.
Elsewhere in the media and telecommunications space, a trader said iHeartMedia Inc.’s 10% notes due 2018 were “moving up as well,” trading “up a couple more points” to 55.
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