Another oil price gain pushes distressed energy names higher; NII debt firm, RadioShack steady

By Stephanie N. Rotondo

Phoenix, Feb. 5 – Distressed debt investors were again focusing on energy names Thursday, which were firming up along with another gain in oil prices.

“It’s all energy,” a trader said. “It’s the only thing that trades.”

Samson Investments Co.’s 9¾% notes due 2020 ended a point higher at 34, a trader reported. EXCO Resources Inc.’s debt was also better, its 8½% notes due 2022 up 4 points at 66 and its 7½% notes due 2018 up a fiver at 68.

In SandRidge Energy Inc., a trader said the 7½% notes due 2023 were a point higher at 72 3/8, while the 7½% notes due 2021 gained 1¼ points to 72½.

Halcon Resources Corp.’s 8 7/8% notes due 2021 were also on the rise, putting on 2½ points to finish at 72¾, according to a trader.

Linn Energy LLC’s debt bucked the day’s trend, ending mixed. The 7¾% notes due 2021 were steady at 79, though the 6¼% notes due 2019 gained a point to 79¾.

Some bonds, however, did not benefit at all from the firmer tone in the oil and gas space.

Swift Energy Co.’s 7 7/8% notes due 2022 were called a point lower at 39.

In the preferred stock arena, Breitburn Energy Partners LP’s 8.25% series A cumulative redeemable perpetual preferred units (Nasdaq: BBEPP) rose 37 cents, or 1.7%, to $22.11. Goodrich Petroleum Corp.’s 10% series C cumulative preferreds (NYSE: GDPPC) meantime gained 45 cents, or 5.48%, to close at $8.66.

The 9.75% series D cumulative preferreds (NYSE: GDPPD) improved 15 cents, or 1.81%, to $8.43.

In Vanguard Natural Resources LLC’s 7.625% series B cumulative redeemable preferred units (Nasdaq: VNRBP), those were 20 cents better on the day, closing at $21.70.

West Texas Intermediate crude oil ended nearly 5% higher on the day at $50.79, a gain of $2.34. Brent crude was similarly higher, rising $2.63 to $56.79.

The gains came on the heels of an attack at an oil refinery in Libya, sparking speculation that production might be curtailed.

However, it was later reported that production at the plant was not impacted.

The upward momentum was also attributed to chatter that oil demand in China might grow as the country’s central bank cut interest rates.

Elsewhere in Commodity Land, coal producer Arch Coal Inc. saw its debt drifting down from the second straight session.

A trader said the 7¼% notes due 2021 fell a point to 25, as the 7% noes due 2019 dipped a quarter-point to 25¾.

The 9 7/8% notes due 2019 were unchanged at 31.

Alpha Natural Resources Inc.’s 6¼% notes due 2021, however, were nearly a point better at 26¼.

Broad market tidbits

Away from the commodity chaos, a trader said NII Holdings Inc.’s bonds were “up a bit.”

He pegged the 7 5/8% notes due 2021 at 29 and the 11 3/8% notes due 2019 at 95.

The trader speculated that the gains were due to investors “digesting” news out in late January in regards to AT&T’s purchase of the company’s Mexico unit.

AT&T will pay $1.875 billion for the business.

The trader noted that the purchase price was perhaps a little more than investors were expecting, thus “maybe there is some optimism around the valuation of the company.

Meanwhile, RadioShack Corp. was said to be readying to file for bankruptcy as soon as Thursday night.

However, the filing could be delayed as the company works to hammer out a prepackaged deal with creditors and with Sprint, which is looking to buy about 2,000 of the company’s store leases.

Any remaining stores are expected to close for good.

One trader said RadioShack’s 6¾% notes due 2019 were “quoted widely” at 15 bid, 18 offered – “so that’s right where it has been.”

“It just doesn’t trade anymore,” said another trader.

Also in the world of retail, Claire’s Stores Inc.’s 8 7/8% notes due 2019 “continue to drift lower,” a trader said, placing the issue at “+/-64,” a loss of about 3 points on the day.

The trader said he hadn’t heard of anything specific that would weigh on the debt, adding that “the cap structure has been weak recently.”

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