Peabody gains, oil and gas mixed after production numbers released; Intelsat, Valeant bonds falter

By Colin Hanner

Chicago, Oct. 17 – The distressed debt market continued a pattern of quiet behavior during Monday’s session, though positive U.S. industrial figures and continued speculation on oil output may have mixed trading in the energy realm.

New data showed U.S. industrial production increased by 0.6% from August to September, and last month saw a 0.1% increase in total industrial production, making it the third out of the past four months to achieve positive production.

Peabody Energy Corp. was mixed after the session closed, as the industrial report indicated that of all major industry groups, the mining sector saw the biggest jump from August to September – from negative 1% to 0.4%. Yet the industry is down 9.4% year over year.

“Gains for oil and gas well drilling and servicing, for coal mining, and for nonmetallic mineral mining and quarrying outweighed a drop in crude oil extraction,” a report said. “The output of mining increased at an annual rate of 3.7% in the third quarter following six consecutive quarterly decreases.”

In response, Peabody’s 10% notes due 2022 were up, trading around “55½,” and the 6½% notes due 2020 were down a quarter-point to 36¼, a market source said.

A trader said the 4.75% convertible notes due 2041 continued to be “very active.”

He said the notes traded “between 8 and 9,” adding that there was “possibly some short covering” going on.

Another market source deemed the issue up over 5 points outright at 8.63.

Elsewhere in the energy realm, domestic crude oil fell by nearly 1.5% in the morning session but retracted slightly at the end of close on Monday.

Data showed that U.S.-based drilling rigs increased on the week, which coupled with the Organization of Petroleum Exporting Countries’ continued output to result in oil prices below $50 a barrel for most of the day until they tipped just over that level at the bell.

Transocean Inc.’s 9% notes due 2023 were down around half a point to 98, a trader said, adding that California Resources Corp. and Chesapeake Energy Corp., though traded, were “pretty much unchanged on the day.”

Linn Energy saw a half-point increase in its 7¾% notes due 2021, which ended at 28.

Around the block

Intelsat SA’s Luxembourg-linked 8 1/8% notes were trading around 31½, “down about a half,” a trader said.

The company’s Jackson-linked 7¼% notes due 2019 were “not overly active” and finished trading at 80½, down 1 point on the day.

Meanwhile, Valeant Pharmaceuticals International Inc.’s 5 7/8 % notes were down about a “half point” to “82½.”

“That’s definitely a good half-point lower,” a trader said.

Valeant announced that it would release its third quarter results on Nov. 8.

Stephanie N. Rotondo contributed to this article.

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