Offshore Drilling bonds plunge; oil and gas loses steam; Ocwen debt hit as license in question

By Stephanie N. Rotondo

Phoenix, Jan. 13 – As oil prices gyrated in Tuesday trading, distressed oil and gas names were mostly weaker on the day.

West Texas Intermediate crude oil started the day trading sub-$45 – the first time at that level since April 2009 – but managed to rebound, ending the day up 45 cents at $46.52.

However, Brent crude slipped 26 cents to $47.17.

One name in particular – Offshore Drilling Holding SA – saw its debt drop over 10 points by the end of the session, though there was no credit-specific news to act as a catalyst.

“Just another fallout of the E&P sector,” one trader said of the debt’s decline.

Meanwhile, Ocwen Financial Corp. also experienced a sizable dip as California regulators took moves to suspend the mortgage servicer’s license.

Offshore takes a dive

Offshore Drilling Holding’s 8½% notes due 2020 lost over 10 points in Tuesday trading, though without any specific news to drive the debt down.

A trader said the paper traded into the high-60s, which compared with previous levels around 80.

Another source said the issue finished at 67 1/8, down from 80½ on Monday.

With oil prices in flux, the rest of the oil and gas arena was also losing ground yet again.

A trader said California Resources Corp.’s 6% notes due 2024 were active, with at least 30 trades taking place during the session.

The trader deemed the debt off a quarter-point at 79½.

As for the 5½% notes due 2021, they also saw “pretty heavy volume,” the trader said, calling the bonds unchanged at 80¼.

There were a lot fewer trades in the 5% notes due 2020, according to the trader. But they ended half a point lower at 83¼.

Also closing softer were Halcon Resources Corp.’s 9¾% notes due 2020, which lost a quarter-point to close at 73¾, a trader said.

Linn Energy LLC’s bonds were meantime off at least a point, the 6½% notes due 2019 at 84 and the 6¼% notes due 2019 at 82¾.

“Man, they are low,” a trader said of Samson Investments Co.’s 9¾% notes due 2020. He saw those bonds dropping 3 points to 32.

And, Midstates Petroleum’s 10¾% notes due 2020 ended at 49, off 4 points from the previous week, the trader said.

Ocwen’s license in trouble

Ocwen Financial’s 5 5/8% notes due 2019 took a hit Tuesday as it was reported that the state’s Department of Business Oversight (DBO) was taking measures to suspend the company’s mortgage license.

One trader said the debt dropped nearly 6 points to 86, adding that the stock was also “getting hammered.”

The company’s common stock (NYSE: OCN) declined $4.41, or 36.18%, to $7.78 on well-above average trading. Altisource Portfolio Solutions SA (Nasdaq: ASPS), a company associated with Ocwen, also weakened, losing $10.45, or 38.79%, to close at $16.49.

For its part, Altisource has scheduled an 11 a.m. ET conference call for Friday “to discuss recent events and strategy,” according to a press release.

At a second desk, a trader said Ocwen’s debt “traded in a wide range between 86 and 89,” which compared to previous trades around 92.

“So they were clearly weakened on that news,” he said.

According to various news reports, DBO has been asking Ocwen for information tied to its compliance with the states Homeowners Bill of Rights since October. The company has reportedly failed to provide the necessary documents, leaving the DBO to move to suspend its mortgage servicing license.

An administrative settlement hearing will be held in February. A hearing on the license suspension has been scheduled for July.

Ocwen said it is cooperating with the DBO and believes the situation will be resolved.

© 2015 Prospect News.
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