Distressed energy bonds lower despite steadying crude price; converts manage to hold their own

By Paul Deckelman and Rebecca Melvin

New York, Jan. 13 – Amid a generalized retreat on Wednesday in the high-yield market, junk’s most distressed sector – energy issues – was seen by traders leading the downside ride – even though domestic crude oil prices seemed to steady after a long drop, posting their first gain for the year, albeit a small one.

That was not enough to help the likes of Oasis Petroleum Inc., whose 2022 notes were both the day’s most active issue and its biggest loser.

Other familiar downside names from that same oil and natural gas exploration and production company sector included Chesapeake Energy Corp., California Resources Corp. and EP Energy Corp.

Companies providing services to the E&P companies, such as Weatherford International plc and Transocean Inc., were also lower.

The weakness carried over into non-energy names as well. One such loser was metals mining company FMG Resources.

Over in the convertibles market, however, energy paper held up better than high-yield straight debt, traders said.

Chesapeake’s convertibles and those of Cobalt International Energy Inc. were unchanged, for example.

SunEdison Inc.’s complex of eight convertibles issues – some of them thinned by last week’s exchange deal – was not trading much despite a decline in the company’s shares and news that David Tepper of Appaloosa Management has filed a lawsuit to prevent the solar technology company from buying Vivint Solar Inc. and funneling some of those assets to its yieldco.

© 2015 Prospect News.
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