Distressed bonds fall amid market tumult; oil and gas off with crude; coal weak; FMG drops

By Stephanie N. Rotondo

Phoenix, Aug. 24 – The distressed debt market was off in Monday trading, though the space held up better than the broader markets.

“There was a little bit of carnage, but not nearly as bad as the equity markets,” one trader said.

He said bonds were down about 1½ points overall.

Another trader saw the market off 2 to 3 points, however.

“A lot of stuff obviously got clobbered,” he said. He did agree that the bond market held in better than equities, opining that it was because “there’s probably more liquidity and panicking in the equity markets.

“People in our market don’t want to incite panic – and they don’t want to hit bids that are down 2 to 3 points.”

And there did appear to be limited liquidity in the bond market, according to a trader.

“Everybody was just sitting on their hands,” he said. “If there were decent bids, they hit them.”

U.S. benchmark crude oil prices were also weaker, dropping 5.69% to $38.15 per barrel.

In the wake of the market’s plunge and oil’s continued slide, distressed oil and gas names were also seen sliding.

“It’s a little bit market, a little bit oil,” a trader said of the sector’s declines.

The oil and gas arena wasn’t the only sector to get hit Monday.

“Commodity stuff just got whacked,” a trader said.

Fortescue Metals Group bonds finished the session lower, but “probably bounced off the bottom,” a trader said.

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