Distressed oil and gas bonds continue upward; Fannie, Freddie preferreds active, better

By Stephanie N. Rotondo

Seattle, Sept. 14 – Distressed oil and gas names continued to gain ground in Thursday dealings.

The gains coincided with another gain in domestic crude prices. West Texas Intermediate crude finished up 42 cents at $49.72, though the commodity did pop above the $50-mark briefly during the session.

Oil prices have had a good week, steadily inching higher as the International Energy Agency and the U.S. Energy Information Administration indicated global crude demand was growing, while producers continued to limit production.

In response to oil’s rise, California Resources Corp.’s 8% second-lien notes due 2022 have had a rise of their own. In Thursday trading alone, the issue was called 3 points better at 59 bid.

A market source also saw Denbury Resources Inc.’s 6 3/8% notes due 2021 pushing higher, adding a deuce to close at 54 bid.

MEG Energy Corp.’s 7% notes due 2024 were meantime also up 2 points, closing at 83¾, according to a source.

Fannie Mae and Freddie Mac preferreds were faring well on Thursday, after Bloomberg posted two articles that pointed to hopes the GSEs would be allowed to rebuild their capital buffers.

Freddie’s 8.375% fixed-to-floating rate noncumulative preferreds (OTCBB: FMCKJ) were up 75 cents, or 11.81%, at $7.10.

About 3.16 million of the preferreds traded.

Fannie’s 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) meantime added 58 cents, or 8.71%, to close at $7.24.

About 3.02 million of those preferreds changed hands.

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