Distressed energy bonds in focus after Doha meeting fails to bring oil production freeze

By Stephanie N. Rotondo

Seattle, April 18 – Distressed debt investors were keeping an eye on energy names on Monday after a meeting held over the weekend in Doha, Qatar, failed to result in an oil production freeze between OPEC and non-OPEC producers.

Domestic crude fell nearly 1% on the day in response to the news. Saudi Arabia was reportedly a major holdout, refusing to participate in any such deal unless Iran agreed to also participate.

Iran has been saying that it would not agree to a freeze until it had reached pre-sanction production levels.

Still, market chatter is that no deal is a better conclusion, as it allows the oil market more time to naturally rebalance itself. Investors appeared to be only partly convinced, as oil and gas securities traded mixed on the day.

Traders said there was a fair bit of action going on in Chesapeake Energy Corp.’s 8% second-lien notes due 2022. One trader said the paper traded “about 40 times,” rising “almost 2½ points” to 60.

A second trader called the bonds “pretty active,” seeing the notes rise to a 59 to 60 context from opening levels around 55.

Whiting Petroleum Corp. was also busy and heading into higher territory, according to a trader.

He saw the 5¾% notes due 2021 tick up almost a point to 73¾, with about $20 million of the bonds trading. The 6¼% notes due 2023 closed up 1¼ points at 75¼.

© 2015 Prospect News.
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