Peabody bonds up as name deemed a value play; oil rallies, boosting sector; FMG, Getty up

By Stephanie N. Rotondo

Phoenix, April 7 – The interest in distressed commodity names continued in Tuesday trading, according to market sources.

Peabody Energy Corp., for one, got a big boost after the company was “mentioned by some hedge fund on CNBC,” a trader said. The bonds ended the day up about 4 points.

Meanwhile, another gain in oil prices added strength to the oil and gas space. Oil prices rose over 3% on Tuesday – which followed an over 5% gain on Monday – as investors reacted positively to a report from the Energy Information Administration indicating that demand was rising and U.S. crude production was slowing.

The commodity was also benefitting from a jobs report that showed a sizable gain in job openings.

However, Standard & Poor’s went on a downgrade rampage during the session. Names like Seventy Seven Energy Inc. and Ocean Rig UDW Inc. saw their ratings cut, but their debt was impacted very little.

Elsewhere in the distressed space, a trader said FMG Resources’ debt ended “better,” seeing the 8¼% notes due 2019 at 83 and the 6 7/8% notes due 2022 at 71.

The trader also saw Getty Images Inc.’s 7% notes due 2020 trading “pretty active” around 51 for most of the day. Late in the day, there was a 53 bid for paper, he remarked.

He said he saw no specific news to act as a catalyst.

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