Distressed energy names gain with oil; DFC Global notes take a dive; rue21 paper trades lower

By Stephanie N. Rotondo

Seattle, July 14 – Distressed debt investors were focused on typical “go-go” names in Thursday trading, though there were a few exceptions, market sources reported.

The energy space was receiving a fair bit of attention, as domestic crude oil prices rebounded from Wednesday’s lows. The commodity had dropped about 4% in midweek trading, as fresh inventory data showed that a global supply glut was very much in place.

But as the dollar weakened – and some saw Wednesday’s crash as overdone – oil rallied 1.63% to $45.48 a barrel.

A trader said there was “a ton of trading” in California Resources Corp.’s 8% second-lien notes due 2022. He called the issue up nearly 2 points at 74.

The trader also saw Chesapeake Energy Corp.’s 8% second-lien notes due 2022 ticking up almost a point to 90¾.

At another shop, Chesapeake’s 6 5/8% notes due 2020 were called 1¾ points better at 74 bid. Denbury Resources Inc.’s 6 3/8% notes due 2021 were seen rising a deuce to 75 bid.

Away from energy, Intelsat SA’s 8% notes due 2024 “traded off again,” according to a trader.

He placed the issue in a 90½ to 91 range, which he said was down a couple points.

The trader also noted that “there wasn’t a lot of activity in the other tranches.”

A second trader saw the 8% notes at 90¾, off 1¾ points.

In the realm of rarely traded issues, a trader said DFC Global Corp.’s 10½% notes due 2020 took a dive during the session.

The paper started the day down 6 to 7 points, he said, but ultimately closed off “almost 15 points” at 45¼.

The trader noted that the paper had not moved since the end of June.

Another trader said the issue opened at 54½, but ended at 45. That compared to 60 at the end of June, he said.

On June 27, the Malvern, Pa.-based non-bank consumer lender announced an exchange for all $800 million of the outstanding 10½% notes for the same amount of 12% senior secured PIK toggle notes due 2020. The early deadline was originally July 11, but was extended to 5 p.m. ET on July 15.

Also, rue21 Inc.’s 9% notes due 2021 were seen milling about the market.

“They never trade,” a trader said. On Thursday, the bonds declined 3 points from the last trades a month ago, ending at 35.

Another trader said there were “a couple prints” in the mid-30s. He also noted that the debt had not traded in a few weeks.

There was no fresh news out on the Warrendale, Pa.-based retailer.

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