Distressed debt action slow post-holiday; California Resources holds in after mini-tender

By Stephanie N. Rotondo

Seattle, July 5 – The distressed debt market was focusing on oil and gas names on Tuesday, though generally trading was deemed rather thin.

Market sources attributed the lack of liquidity to it being the first day back from a long holiday weekend.

California Resources Corp. bonds were unchanged to slightly weaker on the day. Its equity was also in decline, as investors reacted to news that TRC Capital Corp. had launched a “mini-tender” for the stock – a move California Resources then rejected.

Also weaker were Whiting Petroleum Corp.’s convertible bonds. That weakness came as the company said it had swapped another $1.09 billion of debt for new mandatory convertible notes.

It did not help the energy space that domestic crude oil prices dropped over 4.5% on the day to $46.78 a barrel. The decline was attributed in part to concerns about the United Kingdom’s election to leave the European Union. Concerns about slowing growth added fuel to speculation that a global energy supply glut would endure.

Genscape Inc.’s latest inventory report seemed to give credence to that theory, as the data provider reported an over 200,000-barrel build at the Cushing, Okla. delivery point.

Baker Hughes said Friday that active U.S. drill rigs continued to increase, with 11 new rigs coming online last week. Producing rigs had been on the decline as oil prices tanked, but a rally sparked in May resulted in some producers heading back into the fields.

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