Weak crude prices push down sector’s bonds; Freeport-McMoran rebounds; Cliffs’ debt fades

By Stephanie N. Rotondo

Seattle, Feb. 1 – The distressed debt space was weaker Monday, as weak manufacturing data and a renewed decline in crude oil pressured the markets.

A new report showed that manufacturing in China contracted at the highest rate in the last four years. That news, combined with reports that any production cuts among OPEC and non-OPEC oil producers would likely not come soon, pushed crude oil prices down nearly 6.5%.

In turn, oil and gas-linked securities were waning.

Whiting Petroleum Corp.’s 6¼% notes due 2023 fell almost a point to 61½, according to a trader. Oasis Petroleum Inc.’s 6 7/8% notes due 2022 were meantime off over a point at 58¾.

SandRidge Energy Inc. paper, however, bucked the day’s trend.

A trader said the 7½% notes due 2023 inched up a shade to “1 and change,” while the 8 1/8% notes due 2022 were up a like amount at 1 5/8.

Among oil and gas preferreds, Breitburn Energy Partners LP’s 8.25% series A cumulative redeemable perpetual preferred units (Nasdaq: BBEPP) fell $1.16, or 15.61%, $6.27.

Investors remained focused on Freeport-McMoran Inc.’s debt. The paper began falling last week in the wake of disappointing quarterly results and a significant rating downgrade. However, the bonds began to rebound toward the end of the week – a trend that continued into Monday trading.

Meanwhile, Cliffs Natural Resources Inc. was on the decline, as investors continue to digest earnings from last week.

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