Distressed debt trading muted post-holiday; Magnum Hunter ‘way down’; commodities finish weaker

By Stephanie N. Rotondo

Phoenix, Oct. 13 – The distressed debt market was “a little bit softer,” a trader said Tuesday.

“I think guys are just getting back from the long weekend,” he said, as the bond market was closed for Columbus Day. On top of that, “the market ran up a fair amount last week, and I think things just kind of stalled today.”

Not helping matters was renewed concerns about an overabundance of oil, which pushed down domestic crude oil prices over 1% on the day.

In a report out Tuesday, the International Energy Agency said that crude demand would decline through 2016. That, combined with the return of Iranian oil to the marketplace, is causing many to think supply will be well more than needed.

As such, distressed oil and gas bonds were mostly lower on the day.

Magnum Hunter Resources Corp.’s 9¾% notes due 2020 were one of the sector’s biggest losers, dropping 6 points to 43 5/8, according to a trader.

“Those are way down,” he said.

On Friday, the Irving, Texas-based company said it had hired PJT Capital LP as financial advisers and Kirkland & Ellis LLP as legal adviser to explore its strategic alternatives. The company also chose to stop making its monthly dividend payments on its preferred shares.

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