Distressed oil and gas bonds rise with crude prices; iHeart remains under pressure; Guitar Center firms

By Stephanie N. Rotondo

Seattle, Sept. 13 – A gain in domestic crude oil prices helped distressed oil and gas producers’ debt move higher in midweek trading.

For its part, the gain in crude prices was attributed to reports that global demand was growing, which in turn was helping to tighten the market.

Meanwhile, iHeartCommunications Inc.’s bonds “continue to feel weak,” a trader said.

Though he noted that there was no fresh news in the name, he speculated that the market was growing impatient with the company’s restructuring efforts.

As previously reported, iHeart is in the process of a private exchange offer for five series of priority guarantee notes and senior notes due 2021 and its term loan D and term loan E facilities. The company first launched the exchange in April.

Guitar Center Inc. was another name on the radar. Traders said the retailer’s bonds continued to show improvement.

One trader said that he believed the company just released its quarterly results. However, as the company is private, those figures are not available to the public.

Oil and gas space gains

Distressed oil and gas bonds were “a little better,” a trader said Wednesday.

He deemed California Resources Corp.’s 8% second-lien notes due 2022 up 1¼ points at 57¼. Denbury Resources Inc.’s 5½% notes due 2022 were up a similar amount at 45, he said.

In Noble Energy Inc., the trader saw the 7¾% notes due 2024 rising “almost 2 points” to 85¼, while the 7.7% notes due 2025 ticked up half a point to 82¼.

EP Energy Corp. was another gainer, its 8% notes due 2025 adding 1½ points to close at 70, the trader reported.

And, MEG Energy Corp.’s 7% notes due 2024 inched up a point to 81½.

At another shop, a trader said there was “definitely some energy names trading with oil being higher.”

California Resources’ 8% notes were “active,” he said, and a point better at 57.

He also called EP Energy’s 8% notes a point better at 70.

The upward movement of the oil and gas arena came as West Texas Intermediate crude rose $1.14, or 2.36%, to $49.37.

The gains in crude were attributed to the monthly report from the International Energy Agency, which said that there were signs that global demand for crude was improving, thus resulting in a tightening of the market.

Investors chose to focus on the IEA report instead of the U.S. Energy Information Administration’s weekly inventory report, which showed a 5.9 million-barrel build in crude stockpiles.

Analysts polled by Thomson Reuters had expected an increase of 3.2 million barrels.

But the EIA also said that it had downwardly revised its domestic yearly output totals for 2017 and 2018, due to the recent round of hurricanes in the Gulf Coast area.

iHeart fatigue

A trader said iHeart Communications’ bonds “just continue to feel heavy.”

With no news to put pressure on the name, the trader said that “it feels like it’s just fatigue in the name.”

He said the company’s first-lien notes were trading “closer to 70” in the midweek session.

At another desk, a trader said the 9% notes due 2019 were off 2½ points at 77.

Since April, the San Antonio-based multimedia company has been attempting to restructure a large portion of its debt via a private exchange offer. However, despite many extensions – including one on Sept. 7 – and offering additional incentives, the exchange has failed to generate much success.

Giddy-up, Guitar Center

Guitar Center’s 6½% notes due 2019 and its 9 5/8% notes due 2020 continued to trend higher, traders reported on Wednesday.

“They’ve been pretty active,” one trader said. “It’s been volatile for a while now.”

Another trader said he believed that the Westlake Village, Calif.-based music store chain just released earnings, though he had not seen them as the numbers are private.

“So the bonds are creeping higher,” he said.

The first trader pegged the 9 5/8% notes at 62¼, which he called up almost a point.

The second trader said the 9 5/8% notes were “up again some more today,” trading with “a 62 handle.”

The trader noted that prior to this week’s gain, the notes had been in the “higher-50s.

“So they’ve rallied a good bit.”

The trader also saw the 6½% notes moving up to 89½.

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