Distressed bonds pushed aside for new high-yield issues; energy sector debt mostly firm

By Stephanie N. Rotondo

Seattle, April 21 – Distressed debt investors continued to focus on oil and gas-linked debt on Thursday.

However, activity in the space overall was muted as recently-priced high-yield issues – such as Protection 1’s $3.14 billion of 9¼% senior secured notes due 2023 – easily dominated trading.

Still, the troubled energy arena managed to post more ups than downs on Thursday, even as domestic crude oil prices gyrated throughout the session. Oil started the day higher after the International Energy Agency said production from non-OPEC producers would decline this year by the most in a decade, which would help rebalance the oversupplied market. But the commodity turned weaker after Genscape reported a build of over 840,000 barrels at the Cushing, Okla.-based delivery point.

California Resources Corp.’s 8% second-lien notes due 2022 improved over a point to 60¼, one trader said. Another deemed the issue “a little bit better” at 60 bid, 60½ offered.

Sanchez Energy Corp. was also up. A trader said the 6 1/8% notes due 2023 gained 3½ points to close at 72.

At another shop, a market source saw Chesapeake Energy Corp.’s 6 5/8% notes due 2020 jumping 2½ points to 55.

Some oil names, however, failed to take advantage of the day’s firm tone.

A trader said WPX Energy Inc.’s 6% notes due 2022 were “on a lot of bid-wanted lists” on Thursday, following a downgrade from Standard & Poor’s. The debt drifted off 1½ points to 86½.

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