Distressed bonds rise with the tide; energy sector debt improves despite oil’s decline

By Stephanie N. Rotondo

Seattle, July 11 – The distressed debt market was on the rise on Monday, as one trader said the space was “heading up with the ‘high tide lifts all boats’ scenario” occurring in the market.

He was referring to gains in the equities, specifically that the S&P 500 index hit a new all-time high.

However, several distressed traders noted that activity in that realm continued to be on the thinner side.

“A lot of people were out last week, so guys are just getting back into it,” a trader said. He added that, “The markets have been screaming [higher], so people probably don’t want to sell anything.”

That presents a particular problem for “distressed guys,” he said, as even distressed names are trading at higher levels.

To that end, even distressed oil and gas names were getting a boost, despite the fact that domestic crude oil prices fell by 2% on the day.

At one desk, a trader said California Resources Corp.’s 8% second-lien notes due 2022 were up “almost 2 points” at 73¾, while the 5% notes due 2020 ticked up a point to 56.

Another trader said the 8% notes ended with a “73 handle,” which he called up “a point and change.”

Chesapeake Energy Corp.’s 8% second-lien notes due 2022 were meantime seen rising over a point to 87¾.

In Denbury Resources Inc. paper, the 6 3/8% notes due 2021 were deemed 2 points better at 72 bid.

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