Distressed bonds rise with the tide; energy sector debt improves despite oil’s decline; Intelsat unchanged

By Stephanie N. Rotondo

Seattle, July 11 – The distressed debt market was on the rise on Monday, as one trader said the space was “heading up with the ‘high tide lifts all boats’ scenario” occurring in the market.

He was referring to gains in the equities, specifically that the S&P 500 index hit a new all-time high.

However, several distressed traders noted that activity in that realm continued to be on the thinner side.

“A lot of people were out last week, so guys are just getting back into it,” a trader said. But the fact that players were easing back in was not the only factor, he said.

“The markets have been screaming [higher], so people probably don’t want to sell anything,” he said. That presents a particular problem for “distressed guys,” he said, as even distressed names are trading at higher levels.

“There is not enough two-way volatility right now,” he noted.

To that end, even distressed oil and gas names were getting a boost, despite the fact that domestic crude oil prices fell by 2% on the day.

At one desk, a trader said California Resources Corp.’s 8% second-lien notes due 2022 were up “almost 2 points” at 73¾, while the 5% notes due 2020 ticked up a point to 56.

Another trader said the 8% notes ended with a “73 handle,” which he called up “a point and change.”

Chesapeake Energy Corp.’s 8% second-lien notes due 2022 were meantime seen rising over a point to 87¾.

In Denbury Resources Inc. paper, the 6 3/8% notes due 2021 were deemed 2 points better at 72 bid.

Rising Canadian stockpiles of crude, as well as increasing rig counts in the U.S., put pressure on the commodity’s price on Monday. Crude fell 2% to $44.50 a barrel.

On Friday, the latest data from Baker Hughes showed that active U.S. drill rigs had increased yet again, the fifth rise in six weeks. A new report from Genscape Inc. that indicated inventories at the Cushing, Okla. delivery point had fallen by 488,625 did little to alleviate concerns that output was once again too high.

Away from the energy arena, a trader said Intelsat SA’s 8% notes due 2024 were “about unchanged” in a 94¾ to 95 range.

The trader noted that the bonds had fallen to those levels on Friday, though there was no fresh news out on the Luxembourg-based commercial satellite services provider to cause the downward move.

The trader also noted that the issue “continues to be active.”

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