Distressed-debt market trades quietly ahead of July 4 break; energy names turn mixed

By Paul Deckelman

New York, July 3 – Trading in underperforming or distressed bonds was seen by participants to be very quiet on Monday, in line with a quiet session in the overall high-yield bond market, with relatively few participants around heading into the Tuesday’s Independence Day holiday break in the United States.

Traders said that the energy sector was something of a mixed bag – even while world crude oil prices moved up by more than $1 per barrel for most grades, their eighth consecutive gain.

While some names, such as California Resources Corp. continued to rise, other heretofore strong oil-sector performers such as Whiting Petroleum Corp. and Chesapeake Energy Corp. were in retreat.

There meantime were some rumblings heard that the current strong crude price trend underpinning the bonds can’t last in the face of anticipated new supply, setting the stage for a fall in prices at some point.

Away from the energy sphere, the recently underperforming bonds of Arconic Inc. continued to struggle, although the aluminum products producer’s convertible debt seemed to be rebounding after having been pummeled last week on bad news regarding some of its products.

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