Oil, commodity prices slammed; distressed energy bonds soften; Arch steady to lower

By Stephanie N. Rotondo

Seattle, Jan. 11 – Oil prices plummeted Monday, pushing already distressed energy bonds even lower, according to traders.

Domestic crude oil declined 5.55% on the day, trading down to $31.32 a barrel – levels not seen since 2003.

In response, Chesapeake Energy Corp.’s debt was trending downward.

A trader said the recently issued 8% second-lien notes due 2022 slipped a point to 50½.

However, another trader said that paper fell below 50 in Monday trading.

The first trader also saw the 7 1/8% notes due 2020 losing nearly a point to close at 95 1/8.

At another desk, Chesapeake’s 6 5/8% notes due 2020 were seen off 1½ points at 33 bid.

Also drifting lower were California Resources Corp.’s 8% notes due 2022, a trader said. Those bonds slumped over a point to 50½, as the 5% notes due 2020 slipped to 35.

Some names in the oil and gas sector experienced larger declines for the day.

Atwood Oceanics Inc. lost “another 3 points,” a trader said, seeing the 6½% notes due 2020 finishing at 44.

Last week, a trader told Prospect News a “big seller” of the paper sent the debt’s value tumbling.

The coal sector held up well despite news that Arch Coal Inc. filed for bankruptcy Monday. The filing upped Fitch Rating’s trailing 12-month default rate for the metals and mining sector to 15%, up from 11% at the end of December, the agency said in a statement.

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