Brent crude’s ‘head fake’ puts oil and gas arena in the spotlight; iHeart mixed as exchange extended again

By Stephanie N. Rotondo

Seattle, July 20 – The distressed debt market was again focused on the oil and gas arena on Thursday following a “head fake” with Brent crude prices early in the day, according to a trader.

For the first time in six weeks, Brent prices topped the $50 mark.

“People thought it would be going higher,” the trader said, which resulted in a flurry of activity in distressed oil and gas names.

Alas, crude prices – both Brent and West Texas Intermediate – came back in by the end of the day, finishing with a weaker tone. The early rally was due to a bigger-than-expected drawdown of U.S. stockpiles, which was reported by the Energy Information Administration on Wednesday. The report said that inventories fell by 4.7 million barrels for the week ended July 14.

Analysts polled by Thomson Reuters had forecast a draw of 3.2 million barrels.

As for the day’s dealings, Noble Energy Inc.’s 7¾% notes due 2024 hit a high of 82, before settling back down at 81, a trader said.

He said the bonds closed unchanged.

MEG Energy Corp.’s 6 3/8% notes due 2023, however, managed to tick up a quarter-point to 80¾, the trader said.

Another market source called the 7% notes due 2024 up a similar amount at 80¼.

Denbury Resources Inc.’s 6 3/8% notes due 2021 were also firm for the day, adding half a point to close at 59½, a source said.

Not all oil and gas names were riding Brent’s early rally, however.

EP Energy Inc. was one such name. A trader said its 7 3/8% notes due 2020 were steady at 86, though its 8% notes due 2025 were slightly weaker at 79½.

Cenveo Inc.’s 8½% notes due 2022 were also lower, dipping a quarter-point to 60, according to a trader.

Away from oil and gas, iHeartCommunications Inc.’s bonds were mixed after the company yet again extended its previously announced private exchange offer for five series of priority guarantee notes and senior notes and certain term loan facilities in connection with a proposed debt restructuring.

A trader saw the 11¼% notes due 2021 falling a quarter-point to 75½, while the 9% notes due 2019 moved up a share to 79 3/8.

The deadline on the exchange was pushed out to 5 p.m. ET on Aug. 4. The deadline had been set to expire on Friday at 5 p.m. ET.

This marks the seventh time the deadline was extended, as participation has been less than stellar. As of July 5, only 0.6% of the eligible notes had been tendered.

Elsewhere in the telecommunications space, Frontier Communications Inc.’s 7 5/8% notes due 2024 were deemed half a point higher at 80¼.

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