Trading slows before holiday; Peabody amends DIP loan; EP Energy, California Resources up

By Colin Hanner

Chicago, Nov. 23 – The distressed bond market saw mild trading heading into the Thanksgiving holiday, as a few names in distressed land reacted to the continued fluctuation of oil and the dipping of the health care sector on Wednesday. The lack of heavy-volume trading characterized the day.

EP Energy Corp. and Linn Energy, LLC were up on the relatively flat levels of oil futures due to speculation surrounding OPEC supply cuts and the hike in the dollar due to bets of an impending interest rate hike.

In coal and metals, Peabody Energy Corp. received approval to amend its debtor-in-possession agreement, and some of its notes continued to build on the momentum generated in Tuesday’s metals rally.

Freeport-McMoRan Inc. saw equites surge as copper continued to climb and trickled over to its distressed bonds.

Health care equity indices were down in early morning trading but rebounded as the day passed, and Community Health Systems Inc. saw modest gains in its notes.

Oil up, mostly

Oil reflected on Russia’s decision to “freeze” instead of “cut” oil supply ahead of next week’s OPEC supply cut meetings, and continued speculation affected the price of oil.

The dollar rose to levels not seen in a decade off an imminent interest rate hike, spurred by the release of the Federal Reserve’s meeting minutes released late on Wednesday.

As a result, oil slumped, yet distressed oil names seemed to reflect the overall heightening of oil prices on the week.

Linn Energy’s notes were mixed at the end of trading on Wednesday, with an increase and decrease of about the same magnitude for two of its notes.

The 7¾% notes due 2021 were up 1¼ points to 32, a market source said, and its 6¼% notes were down nearly 1½ points to 30½.

Seeing a 1-point increase were EP Energy’s 6 3/8% notes due 2023, which settled at 67½.

California Resources Corp.’s 8% notes due 2022 were up 1½ points to 75½, a trader said.

Stone Energy Corp.’s 7½% notes due 2022 were down ¼ point to ½ point with a 57 handle, a market source said, and rounding out oil and natural gas was EXCO Resources, Inc., whose 7½% notes due 2018 were unchanged.

Peabody, coal, and copper

Peabody Energy received approval from the U.S. Bankruptcy Court for the Eastern District of Missouri of a stipulation that amends the company’s debtor-in-possession credit agreement, according to an 8-K filed Wednesday with the Securities and Exchange Commission.

Specifically, the amendment removes any deadline by which the court must enter an order determining the company’s consolidated net tangible assets issues.

Along with the momentum coal felt on Tuesday, Peabody’s 10% notes due 2022 were up 3½ points on one trade to 81¾, a trader said.

Its 6½% notes due 2020 were down ¾ point to 56, and the 7 7/8% notes due 2026 were up 2 points to 57.

Cliffs Natural Resources Inc.’s 6¼% notes due 2040 were down ½ point to 78½ and were as low as 77¾ and as high as 79 during intraday trading, a market source said.

After copper prices continued to rally into Wednesday – spurring with similar momentum off infrastructure-stimulus hopes under a Donald Trump presidency – Freeport-McMoRan Inc.’s 5.45% notes due 2043 were up 2 point to 86½.

Health and pharma

Community Health’s 7 1/8% notes due 2020 sprung up 3 points in early morning trading on low volume but steadied to a ¾ point increase on Tuesday to 74, a market source said.

Valeant Pharmaceuticals International Inc.’s 7¼% notes due 2022 up ½ point to 86.

Other movers

Satellite communication service provider Intelsat SA’s 6¾% notes due 2018 were overall unchanged on the day at 71½, a trader said, seeing intraday highs of 73 and lows of 69½.

Frontier Communications Corp.’s 7 1/8% notes due 2023 were up ½ point to 86, though it was heavily traded, a market source said.

Caroline Salls contributed to this review

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