Distressed market mixed post-Fed; steel sector rises, oil and gas wanes; Avon improves

By Stephanie N. Rotondo

Seattle, Dec. 17 – The distressed debt market trended toward the mixed side on Thursday, just one day after the Federal Reserve opted to raise interest rates by 0.25%.

“Some things definitely felt a little better,” a trader said. But as stocks were “beaten up, it probably put a little bit of a damper on high yield.”

The steel space, for instance, saw some support in the wake of the U.S. Commerce Department’s announcement that it was imposing countervailing duties on cold-rolled steel from four countries.

Oil and gas names, however, were “still weaker,” the trader said.

Oasis Petroleum Inc.’s 6 7/8% notes due 2022, for example, traded down into the mid-60s, the trader said. That compared to levels around 70 on Wednesday.

“That was one of the more notable moves,” he said.

In distressed oil and gas preferreds, there was initially a modest rebound in paper, though by the bell, issues were mostly soft.

AK Steel Holdings Corp.’s 7 5/8% notes due 2020 were deemed “better” on Thursday on news the Commerce Department would begin imposing countervailing duties on cold-rolled steel products from four countries.

A trader pegged the issue at 41. A second market source saw the issue ending at 40¾, up 1½ points on the day.

Separately, a trader said Avon Products Inc.’s 5% notes due 2023 were “a little bit better,” trading around 70.

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