Verso Paper bonds decline as future called into question; Linn Energy debt trends soft

By Stephanie N. Rotondo

Seattle, Nov. 16 – The distressed debt market was weak Monday as investors remained focused on ongoing negative news.

Verso Paper Corp., for instance, said its future was in question as liquidity and cash flows were insufficient to cover certain obligations. As such, the company said it had hired advisers to go over its restructuring options.

The company’s debt retreated on the news.

In the oil and gas space, Linn Energy LLC paper was deemed slightly better to down a fair bit. The movement came after the company announced on Friday that it had agreed to exchange $2 billion of senior unsecured notes for $1 billion in new second-lien debt.

Come Monday, Moody’s Investors Service downgraded the company, deeming the debt swap a distressed exchange.

Also in the oil and gas arena, Chesapeake Energy Corp. and California Resources Corp. continued to be active but remained weaker despite a gain in oil prices.

A trader said there was “quite a bit of activity” in Chesapeake’s 5¾% notes due 2023, which he said closed off a point at 51 7/8.

The trader also saw the 6 5/8% notes due 2020 declining a point to 57½.

As for California Resources’ 6% notes due 2024, they slipped half a point to 61½, according to the trader.

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