Chesapeake Energy launches exchange offer, bonds sink; Toys ‘R’ Us mixed on early results

By Stephanie N. Rotondo

Seattle, Dec. 3 – Distressed debt investors were focusing on Chesapeake Energy Corp. on Thursday after the company announced a private exchange offer for 10 series of notes.

The Oklahoma City-based oil and gas company said late Wednesday that it would issue up to $1.5 billion of new 8% senior secured second-lien notes due 2022 for notes due 2017 through 2023.

The exchange will be done on a priority basis, with the nearer-term maturities receiving highest priority and therefore the highest compensation per each $1,000 of notes.

On the news, Chesapeake’s debt dropped.

One trader said the name was “pretty active” during the session. The 6½% notes due 2017 – for which holders will receive $970 of the new notes if tendered by the early deadline – “initially traded up,” the trader said, hitting a high of 80. But then the paper “came in hard,” ending at 73.

Meanwhile, Toys ‘R’ Us Inc.’s debt was mixed in Thursday trading, just one day after the company presented at the Bank of America Merrill Lynch Leveraged Finance Conference.

In its presentation, the Wayne, N.J.-based toy retailer released preliminary results for the third quarter.

A market source called the 7 3/8% notes due 2018 off by almost 2 points at 62½ bid. However, another source deemed the 10 3/8% notes due 2017 as slightly better, trading in a 75¾ to 76 range.

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