Distressed bonds gain strength as week begins, Brexit fears ease; commodity-linked debt leads the pack

By Stephanie N. Rotondo

Seattle, June 20 – The distressed debt market was “quite firm today with this lesser chance of a Brexit,” a trader said Monday.

But without any news to help push things around, distressed investors stayed focused on commodity-linked bonds. Overall, commodities were seen improving with domestic crude – it jumped nearly 2.5% to $49.15 a barrel. A weakening dollar was also helping to prop the space up.

A trader said diversified mining company Teck Resources Ltd. was “quite a bit higher” on the day. He saw the 6¼% notes due 2041 rising 3 points to 72½. The 4¾% notes due 2022 were off of the intraday high, but “still up 3 points” at 83¼.

Also in the mining space, Freeport-McMoran Inc. debt incurred decent gains, as a trader said the 3.55% notes due 2022 firmed “almost 3 points” to 86 3/8. The 5.45% notes due 2043 ticked up 4 points in “pretty active trading” to close at 78, the trader said.

The 3 7/8% notes due 2023 were meantime called 3½ points better at 85.

Among steelmakers, AK Steel Holdings Corp.’s 7 5/8% notes due 2020 jumped 4½ points to 94½, as United States Steel Corp.’s 6.55% notes due 2037 held steady at 66½, according to market sources.

And in the oil and gas arena, Chesapeake Energy Corp.’s 6 5/8% notes due 2020 were pegged at 76 bid, up almost 3 points. Denbury Resources Inc.’s 6 3/8% notes due 2021 added a deuce, closing at 69½ bid.

SandRidge Energy Inc.’s 8¾% notes due 2020 were also higher, ending up over a point at 42¼.

On Thursday, the United Kingdom is set to vote on whether or not to leave the European Union. Though bookmarkers have put the odds of the “Brexit” as unlikely, opinion polls have been tilting toward leaving the EU. As such, the markets have been volatile, driven by concerns of what such an action could do to the global economy.

But with the death of British lawmaker Jo Cox last week – the rising star of the Labour Party, 41, was shot and stabbed in Birstall – politicians agreed to suspend campaigning on the vote. Going into the weekend, opinion polls started to show fewer people in favor of the “Brexit,” though such polls are still about evenly matched.

Chemours, Intelsat improve

Gains were also seen in other areas of the distressed marketplace, even though overall activity in those spaces was less than that in commodities.

A trader said Chemours Co.’s 6 3/8% notes due 2023 ticked up a point to 84 3/8.

Intelsat SA’s 7¼% notes due 2019 were also helped by the firm tone of the day, adding over 2 points to close at 72.

For its part, Intelsat paper has been trending weak of late, though there has been no fresh news to weigh on the debt. A previously reported tender offer for up to $625 million of Intelsat Jackson Holdings SA paper is slated to expire at 11:59 p.m. ET on Wednesday, unless again extended.

The company has already extended the deadline twice.

© 2015 Prospect News.
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