Oil and gas bonds decline as crude prices drop; AK Steel falls on cheap imports problem

By Stephanie N. Rotondo

Phoenix, Sept. 11 – Though the distressed debt market was mostly positive as the week came to a close, oil and gas names were under pressure again as oil prices dropped 2.5%.

Away from oil, a trader said a new $6.6 billion high-yield bond issue from Frontier Communications Corp. was “all the action.”

The price of domestic crude suffered as Goldman Sachs analysts lowered their outlook on the commodity due to oversupply concerns and worries about China’s economy.

Goldman cut its 2016 price forecast to $45 a barrel from $57 a barrel. However, the New York-based firm also noted that prices could fall as low as $20 a barrel.

“The oil market is even more oversupplied than we had expected and we forecast this surplus to persist in 2016,” Goldman said in a note published Friday.

Away from oil, there was another commodity that was coming into focus: steel.

In a report out Thursday, the U.S. International Trade Commission said domestic steel producers – such as AK Steel Corp. – could be hurt by imports of cheaper cold-rolled flat steel from at least seven countries, including China and the United Kingdom. As such, the panel elected to continue an investigation into the matter that could eventually lead to import duties on steel.

In response, AK Steel’s bonds were dwindling.

© 2015 Prospect News.
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