Another oil drop weighs on E&P sector; Cliffs Natural Resources gains ground; JCPenney weakens

By Stephanie N. Rotondo

Phoenix, Jan. 6 – There was “more E&P pain with what oil was doing,” a distressed debt trader said Tuesday.

West Texas Intermediate crude drifted further into sub-$50 territory during the session, losing $2.23, or 4.46%, to end at $47.81 a barrel for February delivery. Brent crude meantime hit the $50-mark, ending down $2.22, or 4.18%, at $50.89.

While many – if not most – oil and gas credits were trending weaker with the decline in oil prices, there were not too many that were seeing sizable losses.

Samson Investment Co.’s 9¾% notes due 2020, for instance, were off just a touch at 38¼.

California Resources Corp.’s 6% notes due 2024 were pegged at 80½, down a point on “pretty good volume,” a trader said. The 5½% notes due 2021 slipped half a point to 82, while the 5% notes due 2020 came in over 1½ points to 82 5/8.

However, there were some issues that were getting hit harder than others.

Chaparral Energy Inc.’s 7 5/8% notes due 2022 were seen down 5 points from end-of-the-year trades, as a trader placed the issue at 60½.

SandRidge Energy Inc.’s 7½% notes due 2023 then dropped over 2 points, the trader said, seeing the paper closing around 58¾.

The trader also saw the company’s 8 1/8% notes due 2022 at 60¼, off nearly a deuce.

However, another market source deemed the 7½% notes due 2021 up half a point at 61½ bid.

Cliffs’ debt gains

Among other commodities, a trader said iron ore producer Cliffs Natural Resources Inc. was inching higher on the day.

He pegged the 5.7% notes due 2018 at 69½ bid, 70 offered, up from “68-ish” previously.

Another trader said the 3.95% notes due 2018 were up nearly 1½ points at 69 7/8, though he saw the 4 7/8% notes due 2021 a point softer at 59.

In the coal arena, a trader said there was “limited trading” in the sector, though he saw Arch Coal Inc.’s 8% notes due 2019 falling “a couple points” to 53.

JCPenney soft, iHeart firm

Elsewhere in the distressed space, a trader said J.C. Penney Co. Inc.’s 5.65% notes due 2020 fell 1½ points to 77½.

Another source placed the bonds at 77 bid, down 2 points on the day.

Late in the day, the Plano, Texas-based retailer announced that its holiday same-store sales improved 3.7% year over year and that it was expecting its quarterly sales increase to be at the higher end of its projections.

The company had previously forecast 2% to 4% sales growth.

iHeart Communications Inc. debt was managing to trend higher, despite the overall weak tone of the marketplace.

One trader said the 10% notes due 2018 inched up a quarter-point to 85½.

However, another trader said the paper was “basically unchanged,” though “pretty active,” trading around 85.

© 2015 Prospect News.
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