Distressed bond rebound ends as profit-takers come in; oil and gas falls with crude

By Stephanie N. Rotondo

Seattle, March 8 – The distressed debt market’s recent rally came to a halt on Tuesday, as investors swooped in to take some profits off the table.

“The whole market was off a little bit,” a trader noted. “Miners were getting hit.”

The market’s rebound has been led in large part by a rise in commodity prices – specifically oil, which has gained about $10 in the last month.

In a report sent to clients on Tuesday, Goldman Sachs said oil’s rebound – as well as that of steel and iron – was premature and that the sector needs prices to stay low to deal with the current supply glut.

“Energy needs lower prices to maintain financial stress to finish the rebalancing process; otherwise, an oil price rally will prove self-defeating as it did last spring,” the report said.

For its part, domestic crude oil declined nearly 4.5% to $36.26.

As for oil and gas-linked bonds, Whiting Petroleum Corp. was actively traded and weaker, despite assertions from company management that liquidity was ample.

A trader said the 6¼% notes due 2023 fell almost 2 points to 60¾, as the 5% notes due 2019 dipped 1½ points to 64¼.

The 5¾% notes due 2021 lost 2 points, ending at 61, the trader said.

Meanwhile, Chesapeake Energy Corp. bonds were also sliding downward.

A trader said the 3.872% notes due 2019 declined 1½ points to 30½. The 8% second-lien notes due 2022 fell 2½ points to 51½, he said.

© 2015 Prospect News.
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