Distressed bonds falter as crude drops; oil and gas, retail sectors dip; iHeart takes hit

By Stephanie N. Rotondo

Seattle, Dec. 11 – As crude oil prices took another hefty tumble on Friday, so did the distressed debt market.

“The market was just down today, period,” a trader said. “It was just getting beat up.”

“Everything was heavy today,” said another trader, deeming the market off at least 1 to 1½ points on the day. “Oil and metals and all that kind of stuff were really whacked.”

Domestic crude prices declined over 3.5% on Friday, closing at $35.45, the lowest level seen in seven years. The significant drop came as the International Energy Agency said a global oversupply could worsen come 2016.

The market was so focused on supply concerns that it shrugged off the latest report from Baker Hughes, which showed that the U.S. active drill rig count fell by 21 to 524 last week.

But as crude waned, so did oil and gas bonds.

Chesapeake Energy Corp. – which had been rebounding in the last couple of sessions – resumed its descent on Friday. A trader said the 5¾% notes due 2023 closed in a 30 to 31 context, down from 33 on Thursday.

Separately, iHeartCommunications Inc.’s bonds were meantime trading actively but lower with the rest of the market, according to market sources.

However, the weakness was attributed to news reports indicating the San Antonio-based multimedia company was looking to convert most of its $2.4 billion in unsecured debt into equity.

© 2015 Prospect News.
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