CalRes leads energy names upward as crude surge continues; telecom names mostly firmer

By Paul Deckelman

New York, Nov. 22 – Traders saw relatively little activity Wednesday in distressed debt and in the bonds of otherwise underperforming companies and sectors, in line with a generally slow, sleepy and abbreviated session in the broader high-yield bond market, ahead of Thursday’s Thanksgiving holiday break in the United States.

One of the few issues seen trading in any kind of real volume was energy sector bellwether name California Resources Corp., seen up sharply in heavy trading, coinciding with a renewed surge in world crude oil prices.

Other sector names such as MEG Energy Corp. and EP Energy Corp. were likewise seen higher.

There was relatively active trading in telecommunications names such as Europe’s Altice and the domestic Frontier Communications Corp., which were mostly seen continuing their recent firming trend.

CalRes leads energy names

Traders said that Los Angeles-based California Resources Corp.’s 8% notes due 2022 – considered a benchmark issue for the whole energy sector and a reliable proxy for its movements – were up by more than 1 full point on the session, ending at just over 74 bid, on volume of more than $24 million.

Other sector names seen firming included Houston-based EP Energy, whose 8% notes due 2025 were seen up 1 1/8 point on the day at just over 67 bid, and Calgary, Alta.-based MEG Energy, whose 7% notes due 2024 closed at 91 bid, up 1 3/8 points.

The sector was helped by a continued firming on world crude oil markets, which were up for a second straight session on Wednesday.

West Texas Intermediate crude for January delivery shot up by $1.19 per barrel in New York Mercantile Exchange trading, settling at $58.02, on top of Tuesday’s 41-cent gain.

January-contract North Sea Brent crude firmed by 75 cents per barrel in London futures trading, to $63.32, building on Tuesday’s 35-cent rise.

Telecom names trade up

Traders said the communications sector continued to rebound from its recent weakness on Wednesday.

Netherlands-based cable and broadband service provider Altice’s bonds, issued by its various subsidiaries, dominated the Most Actives list.

Among them were its 6 5/8% notes due 2023, which firmed by 9/32 point to close at 104 9/32 bid, with about $8 million traded.

Its financing unit’s 5½% notes due 2026 ended at 102 bid, up 1/8 point, also on about $8 million traded.

But its 7½% notes due 2026 were seen by a trader to have bucked the generally positive sector trend, losing 3/8 point to end at 106 7/8 bid.

A trader saw Wind Tre SpA’s 5% notes due 2026 “pretty much sideways, with no change in levels” ending at 96½ bid, as over $10 million traded.

He noted that the Italian telecom company’s paper “continues to trade” almost a month after it priced those notes as part of a giant-sized €7.33 billion equivalent four-part euro- and dollar-denominated offering that came to market on Oct. 24.

Among domestic names, Stamford, Conn.-based wireline provider Frontier Communications’ 9¼% notes due 2021 gained ¼ point, closing at 81½ bid, on volume of over $6 million.

Overland Park, Kans.-based wireless provider Sprint Corp.’s 6% notes due 2022 ended at 100 7/8 bid, up 3/8 point on the day, with around $8 million traded.

Distressed names gain

Among the more distressed credits on the day, a trader saw CGG SA’s 6½% notes due 2021 up ½ point on the day, at 46¾ point. The Paris-based manufacturer of seismic equipment and provider of geoscience services is currently in the latter stages of a Chapter 11 restructuring.

Walter Investment Management’s 7 7/8% notes due 2021 gained 1¼ points to end at 58 bid. The Fort Washington, Pa.-based servicer and originator of mortgage loans and servicer of reverse mortgage loans is in the process of lining up creditor support for a planned Chapter 11 reorganization.

New York-based cosmetics company Revlon Consumer Products’ 6¼% notes due 2024 were 1 point better on the day, ending at 57½ bid.

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