Distressed debt remains strong post-Fed decision; California Resources improves with oil’s gain

By Stephanie N. Rotondo

Seattle, Sept. 22 – Distressed bonds continued to gain strength on Thursday, just one day after the Federal Reserve opted to keep interest rates steady.

Additionally, a weakening dollar, combined with positive crude inventory data on Wednesday, helped domestic crude oil prices push higher once again.

Crude rose 1.7% to $46.11 a barrel.

With the rise in oil, California Resources Corp.’s 8% second-lien notes due 2022 added over a point to close at 65¾.

The U.S. Energy Information Administration announced on Wednesday a third consecutive decline in inventories. Last week, crude stockpiles declined by 6.2 million barrels. That compared to a 3.4 million-barrel increase forecast by analysts polled by Reuters.

Among recently topical names, Community Health Systems Inc.’s 6 7/8% notes due 2022 improved almost half a point, according to a trader, continuing the rollercoaster the name has been on since Friday.

The trader placed the issue at 84.

On Friday, it was reported that the hospital operator had hired financial advisers to look into its options. That resulted in a string of losses through Tuesday’s session.

Also in the healthcare arena, Concordia International Corp. – another name that has been on a ride of late – saw its 9½% notes due 2022 gaining almost a point to close at 69¾.

The Canadian drugmaker’s debt has gyrated since last week, when the United Kingdom proposed a bill that would stem hefty drug price increases.

Another notable name, Caesars Entertainment Operating Co., was also better in trading, as investors reacted positively to news the parent company, Caesars Entertainment Corp., would add about $1.2 billion more to the bankruptcy coffers.

A trader pegged the 10% notes due 2018 at 60¾, up three-quarters of a point.

In the world of media and telecommunications, iHeartMedia Inc.’s 11¼% notes due 2021 were “up slightly,” according to a trader, at 77½.

“They traded a bunch,” the trader said.

There was no fresh news out on the San Antonio-based multimedia company. However, it has previously been reported that talks with bondholders on a potential way to deal with the company’s $20 billion debtload have been ongoing.

Also in that space, Avaya Inc.’s 9% notes due 2019 were up 1½ points at 76, trading in “good volume,” a trader said.

The 7% notes due 2019 were a point higher at 74½.

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