China devalues yuan, oil prices slide; oil and gas beaten down; Verso Paper up on numbers

By Stephanie N. Rotondo

Phoenix, Aug. 11 – Heightened concerns about an oil supply glut continued to put pressure on already distressed oil and gas bonds on Tuesday.

“There were a lot of lower trades in that stuff,” a trader said.

The worries came as China devalued its currency by 2%, a move that sparked concerns of a looming currency war.

With a weaker currency, oil could become a pricier commodity for China, which could dampen demand.

On top of the China news, new reports indicated that current oil supplies – both domestic and OPEC-based – remained at record highs.

As a result of the latest news, benchmark U.S. crude oil prices deteriorated $1.51, or 3.36%, to $43.45.

As for the sector’s bonds, several names saw significant declines during the session.

Fresh earnings were meantime moving around Verso Paper Corp.’s 11¾% notes due 2019.

A trader said the bonds rose almost a point to 39½.

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