Distressed bond market preps for holiday week; energy names trend downward amid oil woes

By Stephanie N. Rotondo

Seattle, Dec. 21 – Distressed debt investors focused on the energy space in Monday trading as the market prepared for a shortened holiday week.

Total volume “wasn’t terrible for this close to Christmas,” a trader said. However, away from oil and gas names, most of the activity was centered on the higher rated end of the high-yield space.

As domestic crude prices dipped closer to $34 a barrel, oil and gas-linked companies were mostly trending downward.

A trader said California Resources Corp.’s 8% second-lien notes due 2022 fell more than a point to 51 5/8.

The trader noted that the issue was the most active among distressed bonds.

Energy Transfer Partners LP’s 5 7/8% notes due 2024 were also weaker, losing 1½ points to close at 76¾.

Also off a point were SandRidge Energy Inc.’s 7½% notes due 2023, which ended at 10, according to a trader.

Oasis Petroleum Inc. was meantime mixed on the day, with the 6 7/8% notes due 2022 slipping half a point to 61¼ and the 6 7/8% notes due 2023 rising 1½ points to 60½.

Parker Drilling Co.’s 6¾% notes due 2022 were seen dipping nearly a point to 67, as Whiting Petroleum Corp.’s 6¼% notes due 2023 slipped a touch to 71½.

The declines in oil came as the market continued to worry about oversupply, especially as OPEC has indicated it has no plans to cut production. In fact, the oil cartel’s solution to cheaper oil prices is to produce more.

Still, the broader markets fared rather well on the day, with the Dow Jones industrial average ending up more than 120 points.

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