Linn Energy trading flat after missed coupon payment; Energy XXI also skips coupon

By Stephanie N. Rotondo

Seattle, March 15 – The distressed energy space had two issuers skipping coupons due on Tuesday, a move that was at least partly expected given the depressed nature of the commodity.

Linn Energy LLC failed to pay a $30 million interest payment on its 7¾% notes due 2021, a $12 million payment on its 6½% notes due 2021 and another $18 million payment on Berry Petroleum Co. Inc.’s 6 3/8% senior notes due 2022.

In response, the bonds traded up, but a trader noted that the debt was now trading without accrued interest, “so versus yesterday, [the levels] are probably not much different.”

At one desk, the 7¾% notes were seen at 10¾ bid, 11¾ offered, up 5 points. The 6½% notes were up several points as well, trading in a 10 to 11 context.

As for the Berry issue, those were seen at 17 5/8 bid, 17 7/8 offered, a gain of about 2 points on the day.

Another market source called the 7¾% notes up 5 points at 11½ bid.

Linn also said on Tuesday that it was in default under its $3.6 billion credit agreement, as well as on its second-lien notes.

Energy XXI Ltd. also skipped a coupon payment on Tuesday. The company missed an interest payment on its 11% second-lien debt, as well as its 6 7/8% notes.

There was very little trading in those issues, a market source reported. That could indicate that the move was expected.

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