Energy sector weakens as oil prices retreat further; Guitar Center debt drops as new CEO named

By Stephanie N. Rotondo

Phoenix, Nov. 17 – Distressed bonds were trending toward the softer side Monday, though traders said it was amid limited liquidity.

“There weren’t any panicked sellers, but there weren’t any buyers either,” a trader said.

The trader further speculated that “it felt like” larger dealers were “pulling back” as they tend to do before the end of the year. He wasn’t so sure, however, that news Japan had dropped back into a recession was much of a factor.

“If it was Japan, there would still be some volatility,” he said.

The news out of Japan did, however, put more pressure on oil prices, as that country is the third-largest oil-consuming nation in the world. That in turn weighed on the energy sector.

West Texas Intermediate crude oil fell 33 cents to $75.49 per barrel. Brent crude dropped 34 cents to $79.07 per barrel.

Meanwhile, Guitar Center Inc. paper was down considerably from the end of the previous week. The company announced that it had appointed a new chief executive officer.

Energy weighed down by oil

There continued to be more pain in the energy sector Monday, as oil prices declined further amid concerns about Japan and its latest round in Recession Town.

SandRidge Energy Inc. – a company already dealing with problems of its own – saw its 7½% notes due 2021 fall over half a point to 86 3/8.

At another shop, a market source placed the 7½% notes at 86½ bid, down 1¼ point.

Earlier this month, the Oklahoma-based oil and gas exploration and development company said that the Securities and Exchange Commission had asked the company to look into how it reports its dealings with Occidental Petroleum Corp. Then last week, the company said that it would miss its reporting deadline due to the look into the financial statements.

Samson Investments Co.’s 9¾% notes due 2020 meantime fell nearly a point to 70.

Offshore oil drillers were also getting beaten up in Monday trading.

Paragon Offshore plc’s 6¾% notes due 2022 were 3 points weaker at 63, while Vantage Drilling Co.’s 7 1/8% notes due 2023 managed to tick up slightly to 79.

Seismic data services provider CGG SA managed to fare a little better. A trader said the 6½% notes due 2021 held steady at 83, though another deemed the debt up a quarter-point at 82¾ bid.

Guitar Center names new CEO

Guitar Center announced that its board of directors appointed a new president and CEO on Monday.

Darrell Webb – a 30-plus year veteran of the retail industry – “was recruited by the Board to lead Guitar Center as the company looks to capitalize on its growth prospects.”

Webb is replacing Mike Pratt, who was said to have resigned early Monday morning.

No reason for his departure was given.

Whether spurred by that news or not, the Los Angeles-based musical instrument retailer’s bonds declined considerably.

A trader said the 6½% notes due 2019 fell over 5 points to 85½, as the 9 5/8% notes due 2020 lost “a lot,” falling to 59 from previous levels around 70.

The trader noted that both issues last traded on Thursday.

RadioShack coupon due

A trader said RadioShack Corp.’s 6¾% notes due 2019 “have been weaker the past couple of days,” pegging the issue in a 35 to 36 context.

The trader noted that the company had a coupon due Monday and “I believe it was paid.”

There was no other fresh news out on the Fort Worth-based electronics retailer.

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