Commodity-linked debt sinks amid depressed pricing on metals, oil; Fannie, Freddie drop

By Stephanie N. Rotondo

Seattle, Dec. 8 – Continued declines in commodity prices were again dragging down the distressed debt space on Tuesday.

“Metals, mining and oil were all down,” a trader said.

Domestic crude oil, for instance, traded down 6 cents to $37.59 a barrel. The commodity stemmed earlier losses, which had pushed prices to just south of $37, the lowest level in seven years.

And with steel prices continuing to fall – that commodity has dropped nearly 30% in the last year – and iron ore trading in the high-$30 range, anything commodity-linked was spiraling downward.

Chesapeake Energy Corp., the Oklahoma City-based oil and gas company, saw its 4 7/8% notes due 2022 sliding 1½ points to 29, as the 7¼% notes due 2018 slipped a point to 53 7/8, a trader said. The 6 1/8% notes lost a point as well, closing at 29¼, the trader said.

At another desk, the 6 5/8% notes due 2020 were called 4 points weaker at 31 bid.

Among other oil and gas names, Consol Energy Inc.’s 5 7/8% notes due 2022 were seen falling over 3 points to 63¾.

Among steel names, a trader said AK Steel Holdings Corp.’s 7 5/8% notes due 2021 dropped “2 and change points” to 29 3/8.

The sell-off in Fannie Mae and Freddie Mac preferreds continued in Tuesday trading.

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