Distressed debt activity wanes as market trades off; oil and gas bonds end mixed; AK Steel ends soft

By Stephanie N. Rotondo

Seattle, June 10 – After a recent run-up, distressed debt investors were taking a step back on Friday as weakness pervaded the market.

Aside from new high-yield issues, a trader said that “it didn’t seem like there was a lot of stuff trading, period. There was not a lot of price action, not a lot of notable activity.”

The trader noted that the market has “been ripping” and in the face of a down day – the Dow Jones Industrial index, for instance, was off about 120 points – market players opted to sit and wait.

“Sellers don’t want to hit down bids,” he said. As such, it created a “stalemate in the market.”

The distressed energy sector, for its part, took up the bulk of the day’s activity. But even as domestic crude fell over 3% – falling back under the $50-mark – oil and gas debt was mixed on the day.

Chesapeake Energy Corp. was a good example of the day’s trend. A trader saw the 8% second-lien notes due 2022 were off half a point to 87, while the 6 5/8% notes due 2020 were up a similar amount at 77.

SandRidge Energy Inc.’s 8¾% notes due 2020 were meantime unchanged at 46½, the trader said.

Basic Energy Services Inc. and Legacy Reserves LP both posted gains for the session.

In Basic’s debt, a trader said the 7¾% notes due 2022 rose nearly a point to 36½. The 7¾% notes due 2019 ended a shade higher at 37 5/8, he said.

As for Legacy, its 6 5/8% notes due 2021 were almost a point higher at 43, while its 8% notes due 2020 were pegged at 47 – a gain of “almost 8½ points from June 1,” a trader said.

Crude prices came in Friday as Baker Hughes reported that the number of active U.S. drill rigs increased by three over the week, the second consecutive gain. Market watchers had predicted that oil’s recent rally would encourage production companies to restart drilling projects – but in doing so, they have ignited concerns about what that would mean for the current oversupply problem.

Market tidbits

Away from energy, a trader said AK Steel Holdings Corp.’s 7 5/8% notes due 2020 came in half a point to close at 86½. As the bonds have been rallying of late, the slight weakness could be attributed to profit taking.

Meanwhile, Caesars Entertainment Corp.’s 11¼% notes due 2017 were called almost a point better at 92¼.

A trader also noted that CHC Helicopter SA’s 9 3/8% notes due 2021 were unchanged at 13 3/8.

And, another trader said that, while trading in Intelsat SA debt was limited, its “luxco” paper was “a little bit lower.”

He placed those issues – such as the 8 1/8% notes due 2023 and the 7¾% notes due 2021 – around 28.

© 2015 Prospect News.
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