Distressed bonds trade lower; all pain, no gain for oil and gas debt; RadioShack eyed

By Stephanie N. Rotondo

Phoenix, Dec. 12 – The distressed debt market was “getting kicked in the teeth,” a trader said Friday.

“Most of the action is in oil and gas,” another trader said.

Oil prices plunged further during the session, hitting a fresh five-year low. That came amid another demand forecast cut from the International Energy Agency.

But away from oil and gas names there were a few bright spots, mainly in the retail space.

On Thursday, RadioShack Corp., Quiksilver Inc. and the Gymboree Corp. reported quarterly results. While the results were mixed – at best – those bonds moved up.

For its part, RadioShack learned Friday that its refinancing agreement with Standard General LP in October had not triggered a default, as alleged by lender Salus Capital.

Also notable on the day was Caesars Entertainment Corp., as senior lenders said it had come to terms with the company on a restructuring plan that would put the operating unit into bankruptcy.

However, senior bondholders have yet to sign on to the deal.

Oil had yet to find a floor in Friday trading, as prices continued to weaken.

West Texas Intermediate crude hit a fresh five-year low, losing $2.11, or 3.52%, to close at $57.84 per barrel. Brent crude dropped $1.91, or 3%, to $61.77.

That kept the oil and gas industries in focus during trading.

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