Distressed debt finishes firm; Whiting better on exchange news; Intelsat rises as tender oversubscribed

By Stephanie N. Rotondo

Seattle, June 23 – Distressed bonds ended in positive territory on Thursday, in part because of easing “Brexit” fears and in part because of credit-specific news.

The United Kingdom voted Thursday on whether or not to leave the European Union. Though final results were not expected until early Friday, polls done just prior to the start of the vote showed the U.K. would opt to stay.

That optimism pushed up all the markets, including domestic crude oil. The commodity rose over 2% on the day, trading above the $50-mark for the first time in two weeks.

Crude’s gains also meant gains for oil and gas bonds, such as Chesapeake Energy Corp. A trader said the 8% second-lien notes due 2022 ticked up half a point to 87½.

“Everybody is up, up, up,” he said.

Denbury Resources Inc. also got a little pop as oil prices gained ground.

A market source pegged Denbury’s 6 3/8% notes due 2021 at 71½ bid, up a point.

Commodities were generally better across the board given the firm tone of the market. As such, AK Steel Holdings Corp.’s debt was “fairly active,” according to one trader.

He called the bonds “up a touch on the day.”

A second trader said the 7 5/8% notes due 2021 improved half a point to 89½.

Also in the oil and gas space, Whiting Petroleum Corp.’s bonds jumped considerably after the Denver-based company said it had wrapped a $1.06 billion exchange of notes for mandatory convertible debt. One trader said the bonds were up “3 to 6 points, depending on the flavor.”

Meanwhile, Intelsat SA was also trending upward, as the company said a tender offer at its Intelsat Jackson Holdings SA unit was oversubscribed.

The company also extended the deadline for the tender for the third time.

Whiting up on exchange

Whiting Petroleum’s debt got a boost Thursday as the oil and gas company said it had completed a $1.06 billion exchange of notes for mandatory convertible notes.

“The bonds were way up, all on heavy volume,” one trader said.

He saw the 5¾% notes due 2021 adding 5½ points to close at 93¼, while the 5% notes due 2019 ticked up 4 points to 95. The 6¼% notes due 2023 rose 6 points to 91¾ and the 6½% notes due 2018 increased over 3 points to 97¼.

Another trader said the 5% notes “settled in around 95-96.” The 5¾% notes were pegged in a 93 to 94 context.

Meanwhile, the 1.25% convertible notes due 2020 popped 5 points to 83.5, a market source reported.

The equity did not fare as well, dropping 78 cents, or 6.45%, to $11.32.

All told, the company exchanged $377 million of nonconvertible notes and $687.9 million of convertible notes for the new mandatory convertible notes maturing 2018 through 2023. (See “Whiting issues $1.06 billion of mandatory convertibles in exchange” elsewhere in this newsletter.)

Intelsat tender oversubscribed

Intelsat bonds pushed upward on Thursday after the company said its tender offer for Intelsat Jackson-linked paper was oversubscribed.

A trader said the 7¾% notes due 2021 – a “luxco” issue, not a part of the tender – firmed nearly a point to 27.

Another trader said the luxco’s were “up about half a point” at 27, while the 7¼% notes due 2020 – a Jackson-linked issue, but still not part of the tender – moved up a deuce.

At another desk, the 6 5/8% notes due 2022 – one of the three Jackson issues in the tender – were seen moving up half a point to 68 bid.

The Luxembourg-based commercial satellite services provider first announced the tender on May 12, offering to pay up to $625 million for three series of notes – the 6 5/8% notes, the 5½% notes due 2023 and the 7½% notes due 2021. In its latest update on the offer, the company said that holders had tendered a total of $2.1 billion in securities, or 52.9% of the total outstanding amount.

Additionally, the company again revised the deadline to 5 p.m. ET on June 29 from 11:59 p.m. ET on June 22.

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