Oil prices and E&P bonds softened this morning after reports surfaced that Saudi Arabia’s oil output will return to normal in a few weeks, which is quicker than the market had expected, according to two sources familiar with the situation.

The prospect of a swift recovery comes right on the heels of a spike in oil prices and trading levels yesterday in reaction to the weekend’s drone strikes. WTI fell 6.06% today to USD 59.09 per barrel after reaching USD 62.90 per barrel yesterday. Brent also fell 6.19% today to USD 63.49 per barrel, after reaching as high as USD 69.12 per barrel yesterday.

Chesapeake Energy’s USD 1.3bn 8% senior unsecured notes due 2027 fell to 81 to yield 11.807% today from trades at 84.5 to yield 11.023% yesterday. The bonds jumped to 82 to yield 11.578% yesterday from 77 to yield 12.755% on Friday.

California Resources’ USD 2.05 8% second lien notes due 2022 fell to 58.438 to yield 28.44% today from trades at 63 to yield 25.08% yesterday. The bonds jumped to 63 to yesterday from trades at 55 on Friday.

Oasis Petroleum’s 400m 6.25% senior unsecured notes due 2026 last traded today at 86.75 to yield 8.944% from trades at 89 to yield 8.451% yesterday. The bonds initially jumped to 87 yesterday from trades at 83.03 on Friday.

Offshore driller Valaris’ USD 333m 5.2% senior unsecured notes due 2025 traded today at 64.5 to yield 14.892% from 67 to yield 14.013% yesterday. The bonds initially traded up 68.5 from trades at 93.

WeWork’s capital structure declined this morning in reaction to reports that the tech startup’s IPO has been postponed, according to two sources familiar with the matter. The office-sharing company had planned to market its shares to investors this week, but management and advisors decided to scrap the offering at least until next month, according to media reports.

The issuer’s USD 669m 7.875% senior unsecured notes due 2025 fell as low as 95.5 to yield 8.907% this morning before rebounding slightly to trade at 97.125 to yield 8.526%, down roughly seven points from 102.813 to yield 7.254% on Monday.

J.Crew’s term loan jumped this week after the company announced its plans to spin off its Madewell denim chain in a public offering, five months after announcing it was considering the move. Chinos Holdings, which owns J.Crew, filed an S-1 for Madewell on 13 September.

Chinos Holdings expects to use the IPO proceeds to repay debt, as well as for general corporate purposes. Analysts say that a Madewell offering will test the demand in public markets for apparel retailers, a sector that has notoriously struggled this year.

“The IPO could garner a substantial valuation and help pay down a meaningful portion of the over USD 1.7bn in debt, but the ultimate ability to address J.Crew’s highly leveraged capital structure depends on the public market’s receptivity to apparel retailers and the company’s operating performance,” says Raya Sokolyanska, a senior analyst at Moody’s.

J.Crew’s USD 1.185bn Libor+ 322bps consenting term loan due 2021 jumped Monday (16 Sept) to the 91.523/92.818 context from 84.125/86.25 on 13 September, according to Markit. The facility settled around the 91.327/92.635 context today (17 September).

Frontier Communications CTF bonds maintained their trading rally today following a Wall Street Journal report yesterday (16 September) that the company “was set to make” USD 322m of interest payments that were due 15 September to four classes of bonds, including the high-coupon CTF bonds, according to a sellsider and two buysiders. 

FTR’s USD 3.6bn 11% unsecured CTF notes due 2025 traded most actively yesterday, and last changed hands today at 53.25 and a 27.262% yield, according to MarketAxess. That’s up from trades in the high 40s after the company’s 2Q19 earnings release.

The company also owed coupons on the USD 2.2bn 10.5% CTF notes due 2022, USD 220m 6.25% unsecured notes due 2021, and the USD 55m 8.88% unsecured notes due 2020.

There had been some market speculation that management might make use of the grace period to herd bondholders into a deal, as restructuring expectations have been priced into the company’s USD 17bn capital structure.

2019 Debtwire