Distressed oil and gas bonds firm despite crude’s modest retreat; Fannie, Freddie active

By Stephanie N. Rotondo

Seattle, May 31 – The distressed debt market was subdued in the final trading session of the month, but the energy sector still managed to post gains.

The sector’s improvement came even as oil prices came in a bit following comments made by Suhail bin Mohammed al-Mazroui, the UAE’s oil minister.

“We are optimistic,” he said of the state of the oil market. “We are seeing that the market is correcting upward.”

Mazroui made the comments to reporters in Vienna, as OPEC members prepare to meet in the Austrian capital on Thursday.

In distressed dealings, a trader said California Resources Corp.’s 8% second-lien notes due 2022 ticked up over half a point to 73, while Comstock Resources Inc.’s 9½% notes due 2020 improved nearly a point to 27.

Another market source said SandRidge Energy Inc.’s 7½% notes due 2021 inched up almost a point to 6¾ bid.

While the oil and gas space was mostly firm for the day, there were a few that did not follow the trend.

Denbury Resources Inc.’s 6 3/8% notes due 2021 were deemed a quarter-point lower at 73¼ bid.

Meanwhile, there continued to be a fair bit of action in Fannie Mae and Freddie Mac preferreds, even as the day’s broader volume was deemed “incredibly light” by a market source.

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