Distressed energy credits trend mostly higher as crude prices boosted; Micron debt trades off

By Stephanie N. Rotondo

Seattle, April 8 – As has been the case for most of the week, new high-yield issues dominated trading on Friday, pushing distressed issues to the side.

“Numericable was the biggie,” a trader said, referring to the company’s $5.19 billion deal that priced Wednesday. He also noted that Charter Communications Inc.’s $1.2 billion issue from Thursday was in focus.

But even with the activity in new issues, the trader commented that there was “not a ton of trades” in the end-of-week session.

Of the day’s distressed dealings, oil and gas credits continued to be on the radar, especially as oil prices got a huge boost.

“Oil was very high, so a lot of these oil and gas-ers were up,” a trader said.

A nearly 6% surge in oil prices again led energy-linked securities higher. Domestic crude was gaining on hopes a production freeze deal would be inked at a meeting of oil producers in Doha on April 17.

Also helping the commodity rise was fresh economic data that suggested U.S. stockpiles were declining.

A trader said Southwestern Energy Co.’s 4.05% notes due 2020 ticked up almost half a point to 73½, while the 10% notes due 2022 moved up to 67¾.

Unit Corp.’s 6 5/8% notes due 2021 meantime “popped 2 points” to 52¼, a trader reported. The gain came as the company said it had made amendments on its credit facility, which included a reduction of commitments to $475 million from $550 million.

Meanwhile, Whiting Petroleum Corp.’s 6½% notes due 2018 were seen unchanged at 84¾.

“Go figure,” a trader said of the issue’s lag behind the rest of the market.

Breitburn Energy Partners LP’s 8 5/8% notes due 2020 also bucked the day’s trend, falling 3 points to 5¾.

However, Breitburn’s preferred units did well for the day.

The 8.25% series A cumulative redeemable perpetual preferred units (Nasdaq: BBEPP) finished the session a dime higher, or 1.79%, at $5.70. The units were up by 25 cents, or 4.4%, at $5.85 in early trades.

Among other MLP-linked preferred units, Legacy Reserves LP’s 8% series B fixed-to-floating rate cumulative redeemable perpetual preferred units (Nasdaq: LGCYO) ended up 42 cents, or 17.16%, at $2.84. The units were up 58 cents, or 23.76%, in early trading, at $3 even.

The 8% series A fixed-to-floating rate cumulative redeemable perpetual preferred units (Nasdaq: LGCYP) were meantime up 17 cents, or 6.56%, at $2.76. At mid-morning, the issue was 37 cents, or 14.27%, better at $2.96.

In Vanguard Natural Resources LP units, the 7.625% series B cumulative redeemable preferred units (Nasdaq: VNRBP) gained 32 cents, or 12.65%, to $2.85. The units had risen 27 cents, or 10.85%, better at $2.8045 in earlier trading.

The 7.875% series A cumulative redeemable preferred units (Nasdaq: VNRAP) improved 8 cents, or 2.2%, to $3.71. Paper had been up 18 cents, or 4.96%, to $3.81 at midday.

Micron slides

A trader said Micron Technology Inc.’s bonds were coming in as the Boise, Idaho-based semiconductor manufacturer said it was considering a senior bond deal of up to $1 billion, as well as a new $500 million term loan B.

The trader saw the 5¼% notes due 2023 declining a deuce to 78½.

“All of the other bonds kid of followed suit,” he said.

In a regulatory filing on Friday, Micron said proceeds from the aforementioned deals would go toward general corporate purposes, including working capital and capital expenditures.

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