Oil, gas names stay weak despite oil rebound; iron, coal dip as forecasts cut; Ocwen falls

By Stephanie N. Rotondo

Phoenix, Jan. 14 – Commodities were again the main focus of the distressed debt market, traders reported Wednesday.

In the oil and gas space, oil prices were gyrating, eventually ending with a positive tone. However, that did little to boost the sector’s bonds.

One trader did note that some names, like California Resources Corp., were “seesawing with oil.” However, in the case of CalRes’ 6% notes due 2024, they were still weaker, ending half a point lower at 79.

Meanwhile, coal and iron names – such as Cliffs Natural Resources Inc. and Alpha Natural Resources Inc. – were weaker as Citigroup cut its pricing forecasts for both resources.

“These bonds are all going to zero, these coal bonds,” a trader said.

Away from commodities, Ocwen Financial Corp. continued to be under pressure as investors reacted to news out Tuesday regarding the company’s mortgage lending and servicing license in California.

However, the bonds were not down nearly as much as they were in the previous session, when they were seen declining 10-plus points.

An administrative settlement hearing will be held in February. A hearing on the license suspension has been scheduled for July.

Ocwen said it is cooperating with the DBO and believes the situation will be resolved.

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