Distressed debt rises as Fed holds rates steady; oil’s increase helps the sector

By Stephanie N. Rotondo

Seattle, Sept. 21 – Distressed bonds were gaining ground Wednesday with the rest of the markets, as the Federal Reserve opted to keep interest rates unchanged.

The central bank said it was keeping rates at the current 0.25% to 0.50% rate. Three members of the Federal Open Market Committee voted to raise rates to 0.50% to 0.75%, pointing to continuing signs of improvement in the economy and risk outlook.

A rate increase in December remains squarely on the table.

Also giving the distressed arena a boost was a hefty gain in domestic crude oil prices, which came as the U.S. Energy Information Administration announced a third consecutive decline in inventories.

Last week, crude inventories declined by 6.2 million barrels. That compared to a 3.4 million-barrel increase forecast by analysts polled by Reuters.

Domestic crude rose by 3.5% to $45.59 a barrel.

“There was a little rebound in oil today,” a trader said, which was helping the oil and gas space in particular improve.

EP Energy Corp., for instance, saw its 9 3/8% notes due 2020 adding 2½ points to close at 67½, according to a trader.

The company’s 6 3/8% notes due 2023 were meantime up nearly a point at 55¼.

Still, there were a couple oil and gas names that bucked the upward trend.

MEG Energy Corp. was one such name, as its 7% notes due 2024 dipped a point to 74¾.

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