Distressed bonds mixed as economic data weighs on market; oil and gas mostly steady; coal weak

By Stephanie N. Rotondo

Phoenix, May 15 – There was “no real start whatsoever” to trading in the distressed debt market on Friday, according to a trader.

The trader said the reaction to the University of Michigan preliminary sentiment index “did not go well.”

The index dropped 7.3 points to 88.6 for the month of May. The reading was the lowest seen since December 2012, when the markets were worried about the government falling off of the so-called “fiscal cliff.”

The result was also lower than that forecast by analysts polled by Bloomberg. On a median basis, analysts had predicted the index would stay steady at 95.9.

Additionally, the equity markets were dwindling after the Philadelphia Federal Reserve released its quarterly survey results, which indicated that economists see second quarter economic growth at 2.5%.

That was down from previous estimates of 3%.

“Treasuries rallied and the rest of the market was muted,” the trader said.

Still, the overall tone of the day for distressed names was mixed.

For the most part, oil and gas credits were holding steady throughout the session.

A trader saw offshore oil producer Hercules Offshore Inc. unchanged, pegging the 7½% notes due 2021 at 34¼.

EXCO Resources Inc.’s 7½% notes due 2018 were also treading water, the trader said. Those went out around 71.

Meanwhile, a trader said SandRidge Energy Inc.’s 7½% notes due 2021 were weaker, falling 1½ points to 69½.

Another market source placed the issue at 69¾ bid, down 1½ points.

And, Swift Energy Inc.’s 7 7/8% notes due 2022 rose 1½ points to 45½.

In the coal sector, weakness remained.

“All these unsecured coal bonds keep drifting lower,” a trader said.

Arch Coal Inc.’s 7¼% notes due 2021 closed “down at least a point,” he said, pegging the notes at 18½.

He also saw Alpha Natural Resources Inc.’s 6¼% notes due 2021 finishing around 16.

A second trader called Arch Coal’s 7¼% notes at 18½, which he said was off 2 points.

However, he deemed the 7% notes due 2019 unchanged at 19.

That trader also placed Alpha Natural’s 6% notes due 2019 at 16, unchanged.

At yet another shop, Alpha Natural’s 6¼% notes were called 1¼ points weaker at 15½.

© 2015 Prospect News.
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