Distressed market holds firm; AK Steel paper rises on tariff ruling; energy bonds mixed

By Stephanie N. Rotondo

Seattle, Dec. 23 – The distressed debt market ended with a positive tone on Wednesday.

One trader even remarked that the space “kind of was [busy] for this close to Christmas.”

“It seems like some of the things that have been beaten down were bouncing up a little bit, but on thin volume,” another trader said.

AK Steel Holdings Corp. got a boost after the Commerce Department announced preliminary duties on imported corrosion-resistant steel. The duties were handed down to those imports coming from China, India, Italy and South Korea.

Meanwhile, the oil and gas sector continued to see the bulk of the activity, though the overall performance of the day was mixed.

On the upside, a trader said California Resources Corp.’s 8% second-lien notes due 2022 ended up nearly a point at 52.

The trader also noted that the issue was “the top bond” of the day.

WTI Offshore Inc.’s 8½% notes due 2019 were also better, moving up to 36 from levels around 32½ a week ago, the trader said.

Another gainer was EP Energy LP, whose 6 3/8% notes due 2023 inched up half a point to 48½.

Rounding out the day’s winners, Breitburn Energy Partners LP’s 8 5/8% notes due 2020 jumped 4 points to 19, according to a trader.

“It seems unrealistic,” the trader said of the improvement, though he conceded that there were several prints at that level.

As for the day’s downers, Energy XXI Ltd.’s 8¼% notes due 2018 were “down a shade” at 25 7/8, a trader said.

Swift Energy Co.’s 7 7/8% notes due 2022 were meantime off 4 points at 9.

The moves came as domestic crude improved over 4% on the day, hitting $37.61 a barrel.

The strength was due to the American Petroleum Institute’s latest report – out late Tuesday – which indicated that oil inventories declined by 3.6 million barrels last week. Analysts had forecast a build of 1.1 million barrels.

Additionally, the U.S. Energy Information Administration said stockpiles fell by 5.9 million barrels last week.

Analysts polled by The Wall Street Journal had expected a gain of 600,000 barrels.

AK Steel stronger

The Commerce Department announced on Wednesday that it had set preliminary dumping tariffs on certain steel imports from China, India, South Korea and Italy.

In response, AK Steel’s bonds were “better,” according to a trader.

The trader said the 7 5/8% notes due 2020 hit a high of 43, though it was going out in a 41½ to 42½ context. Still, that was up from the high-30s, he said.

“A couple of other [steel] names were inching up slightly, but nothing notable,” he added.

At another desk, a trader pegged the 7 5/8% notes at 41½, which he called up half a point.

Imports of corrosion-resistant steel products from China will be slapped with duties of 255.8%, the Commerce Department said. India will face duties of 6.92%, South Korea of 3.51% and Italy at 3.11%.

The agency said the tariffs were being put into place as imports from said countries received unfair government support.

Imports from Taiwan were not handed any duties.

© 2015 Prospect News.
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