Oil, gas sector takes hits as oil prices hit five-year low; Cliffs, Alpha Natural soften

By Stephanie N. Rotondo

Phoenix, Dec. 8 – Oil and gas names continued to be in focus in the distressed debt market on Monday as oil prices fell to a five-year low.

West Texas Intermediate crude fell to the lowest level since July 2009, dropping $2.82, or 4.28%, to $63.02 per barrel. Brent crude meantime declined $2.86, or 4.14%, to $66.21.

A trader said Halcon Resources Corp.’s 8 7/8% notes due 2021 were “the top traded bond in high yield,” with about $23 million being exchanged.

The notes lost 1½ points, ending around 72¾.

The 9¾% notes due 2020 were also active, with about $22 million trading. That paper ended off nearly a point at 73¾.

Other oil and gas preferreds were also taking hits during Monday trading.

Among other commodity companies, Cliffs Natural Resources Inc.’s bonds continued to get beaten down.

A trader said the 3.95% notes due 2018 declined over half a point to 69. The 6¼% notes due 2040 dropped “almost 4 points” to 56, while the 5.9% notes due 2020 lost a deuce to close around 60.

In the coal space, Alpha Natural Resources Inc.’s 6¼% notes due 2021 were seen ending down 2½ points at 39 by one trader. He also saw the 9¾% notes due 2018 fell a point to 62.

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