Distressed bonds trail broad markets lower; oil and gas names weak again; Bombardier gains

By Stephanie N. Rotondo

Phoenix, Aug. 21 – The distressed debt market came crashing down with the broader markets Friday amid continued fears of emerging markets and ongoing pressure on crude oil.

In the straight equity market, the Dow Jones industrial average was down more than 530 points. In the overall high-yield space, the KDP High Yield Index was seen falling to fresh 52-week lows.

Concerns about China’s slowing economy grew Friday as new manufacturing data showed the largest contraction in over six years. U.S. benchmark crude oil meantime dropped sub-$40 per barrel as a report showed U.S. drillers added more rigs into production last week, the fifth week in a row.

Oil prices did recover some ground, however, ending north of $40.

Despite oil’s minor recovery, most distressed oil and gas names continued to trend lower.

SandRidge Energy Inc.’s 7½% notes due 2021 were pegged at 28 bid, down a point on the day. Chesapeake Energy Corp.’s 6 5/8% notes due 2020 were also weaker, losing nearly a point to end at 76 bid.

Linn Energy LLC’s 7¾% notes due 2021, however, managed to inch up a shade to 45 bid, according to one market source.

Away from oil and gas, Bombardier Inc.’s debt was ticking up following news out late Thursday regarding the company’s belabored CSeries aircraft.

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