Oil and gas bonds ‘volatile’ as crude gyrates; Teck up on streaming deal; Bombardier down

By Stephanie N. Rotondo

Phoenix, Oct. 7 – It was a day of big moves in the distressed debt market, with most toward the higher side.

Oil and gas bonds in particular were buzzing given an early rally in domestic crude oil prices. The commodity was gaining on expectations that fresh data from the U.S. Energy Information Administration would show stockpiles declining and production slowing.

However, the latest weekly report showed a higher-than-expected addition to inventories and an unexpected increase in production. Oil prices then reversed course, ultimately ending down nearly 1% on the day.

Still, the bonds of distressed oil and gas producers were on the rise.

“It’s all these E&Ps that are heavily shorted,” a trader said, adding that most were “up more intraday,” but gave back a portion of the gains.

Meanwhile, Teck Resources Ltd. paper got a boost on news the company had inked a “streaming” deal for one of its Peruvian mines. Bonds were up 3 to 4 points, according to market sources.

Alas, not every name was moving up.

Bombardier Inc. bonds were coming in after it was reported that talks with Airbus were a no-go. The headlines weren’t all bad, however, as Quebec’s economy minister hinted that a foreign investor in the aircraft manufacturer would not be unwelcome.

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