Distressed bond market rally continues; oil, gas names gain with crude; steelmakers’ debt ends firm

By Stephanie N. Rotondo

Seattle, March 2 – A distressed debt trader said that “a lot of things continued to rally” in midweek trading.

The market’s improvement followed a report from ADP that showed 214,000 private sector jobs were added in February. The figure was better than expected and higher than January’s revised gain of 193,000 jobs.

Additionally, oil prices continued to tick up, despite the Energy Information Administration reporting a crude inventory build that was more than forecast.

U.S. stockpiles increased by 10.4 million barrels, versus the 3.6 million add that analysts had predicted.

However, the report also indicated that U.S. production was slowing down amid the oversupplied market.

Furthermore, hopes for a production freeze outside of the U.S. were increased on Wednesday, as Venezuela’s oil minister Eulogio Del Pino said that more than 15 oil-producing countries planned to meet soon to discuss the proposed freeze.

That news, of course, helped give the oil and gas sector another boost.

A trader saw California Resources Corp.’s 8% second-lien notes due 2022 rising “another 3 points” to 37 from 24 previously.

At another shop, Denbury Resources Inc.’s 6 3/8% notes due 2021 were seen rising 3½ points to 36½ bid, as Chesapeake Energy Corp.’s 6 5/8% notes due 2020 increased nearly 3 points to 26½.

Meanwhile, a trader said that “steel names were getting a little bit of a bounce” on news the U.S. would begin imposing tariffs on steel imported from seven other countries.

Steel on the rise

AK Steel Holdings Corp. and United States Steel Corp. saw their debt improving on Wednesday after the U.S. Commerce Department issued preliminary findings that showed companies from seven different countries had violated an anti-dumping law on cold rolled flat steel.

One trader said AK Steel’s 7 5/8% notes due 2020 were “very active,” trading up to a “63 handle.” That compared to “62-ish” on Tuesday and levels in a 59 to 60 context on Friday.

The trader also deemed U.S. Steel’s 7 3/8% notes due 2020 “fairly active,” trading up “a couple points” to 67½.

Another market source pegged AK’s 7 5/8% notes at 64¼ bid, up almost 2 points on the day. U.S. Steel’s 7% notes due 2018 were seen jumping over 6 points to 85¾.

Based on the information produced by the International Trade Administration, the Commerce Department is calling on the U.S. Customs and Border Protection Agency to “require cash deposits” on cold rolled steel from Brazil, China, India, Japan, Korea, Russia and the United Kingdom.

Certain exporters from China, Japan and Russia could also be faced with retroactive duties.

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