Crude oil prices falter, taking distressed oil and gas names along; iHeart trades up; Fannie, Freddie mixed

By Stephanie N. Rotondo

Seattle, July 21 – Trading in the distressed debt market slowed down on Friday, even as domestic crude oil prices slid to a one-week low.

West Texas Intermediate crude dropped 2.64% on reports that production from OPEC increased by 145,000 barrels per day in July.

The production gain was attributed to higher supplies out of Saudi Arabia, the United Arab Emirates and Nigeria.

While trading in the oil and gas space was a bit tepid, what was trading was losing ground.

California Resources Corp.’s 8% notes due 2022, for instance, were not overly busy, a market source said, but went out straddling 63.

That compared to 65¼ the day before.

MEG Energy Corp. was also a loser, as its 6 3/8% notes due 2023 declined half a point to 79¼. Another market source pegged the 7% notes due 2024 at 79½, down nearly a point.

Away from oil and gas, iHeartCommunications Inc.’s 9% notes due 2019 were slightly better at 80¼, a source reported.

On Thursday, the company yet again extended its previously announced private exchange offer for five series of priority guarantee notes and senior notes and certain term loan facilities in connection with a proposed debt restructuring.

The deadline on the exchange was pushed out to 5 p.m. ET on Aug. 4. The deadline had been set to expire on Friday at 5 p.m. ET.

This marks the seventh time the deadline was extended, as participation has been less than stellar. As of July 5, only 0.6% of the eligible notes had been tendered.

In the world of distressed preferred stock, Fannie Mae and Freddie Mac paper was active, but mixed.

Fannie’s 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) were steady at $6.27. Freddie’s 8.375% fixed-to-floating rate noncumulative preferreds (OTCBB: FMCKJ) – the more active of the two issues, with over 1.8 million shares trading – slipped 7 cents, or 1.18%, to $5.88.

There was no fresh news out on the GSEs to cause the movement.

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