Another big drawdown boosts crude prices, lifts distressed oil and gas; Fannie, Freddie up

By Stephanie N. Rotondo

Seattle, July 19 – While trading remained muted in the distressed debt market on Wednesday, the trading that was being done was centering on the oil and gas arena.

Oil and gas-linked names – such as California Resources Corp. – were trending up as domestic crude oil prices rose nearly 1.5% on the day.

Oil’s gains came as the Energy Information Administration reported that U.S. crude stockpiles fell by 4.7 million barrels last week.

Analysts polled by Thomson Reuters had expected a drawdown of 3.2 million barrels.

For its part, California Resources’ 8% notes due 2022 firmed half a point to 65˝ bid, according to a market source.

MEG Energy Corp.’s 7% notes due 2024 were also moving higher – which has been a recent trend for the name.

A source called the bonds half a point better at 80 bid.

Even Denbury Resources Inc.’s 6 3/8% notes due 2021 managed to inch upward, ticking up a quarter-point to 59 bid.

As for distressed preferreds, Fannie Mae and Freddie Mac were busy and better.

Fannie’s 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) firmed 15 cents, or 2.45%, to $6.28. The 8.25% series T noncumulative preferreds (OTCBB: FNMAT) gained 17.5 cents, or 2.94%, to close at $6.125.

Freddie’s 8.375% fixed-to-floating rate noncumulative preferreds (OTCBB: FMCKJ) meantime rose 13 cents, or 2.27%, to $5.85.

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