Battered energy names rebound on oil price rise, though converts lag; Sprint bounces back

By Paul Deckelman

New York, Jan. 21 – Distressed-debt traders said that bonds of troubled companies, particularly in the beleaguered energy sector, mounted an impressive turnaround on Thursday, helped by improvements in both stocks and, especially, oil. The market had been roundly beaten down on Wednesday amid lower oil prices and a broad retreat in the equity markets.

A 4% rise in crude prices, despite another big addition to United States crude stockpiles, helped lift the recently hard-hit bonds of exploration and production companies such as Whiting Petroleum Corp., Oasis Petroleum Inc., WPX Energy Inc. and Genesis Energy, LP, among others.

However, convertible bonds of some of the energy names, notably Whiting, remained weaker despite the upturn in the company’s straight paper and its shares.

In the emerging markets space, sovereign debt of oil-dependent Latin American countries such as Venezuela and Colombia got a boost from the oil-price gain, as did the Venezuelan and Mexican state-owned oil monopolies, PDVSA and Pemex.

Away from the energy names, Sprint Corp.’s junk bonds were seen higher across the board, in contrast to Wednesday’s selloff. Among the big gainers were the Number-Three U.S. wireless carrier’s 7% notes due 2020, which had nosedived by more than a dozen points on Wednesday.

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