Huge bond issuance, still no COVID deal, and more

The Federal Reserve may have to adjust its bond-buying programme to adapt to the enormous issuance of long-dated debt lined up by the Treasury department, strategists say.

Government bond prices dipped on Wednesday, pushing yields up from close to record lows across a range of maturities after the Treasury outlined plans to next week sell a record $112bn of debt maturing in three, 10 and 30 years.

The Treasury Department plans to offer $112 billion in notes and bonds next week as the bill for widespread economic stimulus skyrockets.

The sum marks a record for the department's quarterly debt issuance. The Treasury will also pivot from issuing shorter-dated notes to focus on longer-term securities at the upcoming offering. By boosting the sale of longer-dated bonds, the department can lengthen the average maturity of outstanding government debt.

Top Democrats and White House officials on Wednesday remained nowhere close to an agreement for a new rescue package to address the coronavirus’s toll on the economy, growing increasingly pessimistic that they could meet a self-imposed Friday deadline as President Trump again threatened to act on his own to provide relief.

Even as they vowed to continue talks, negotiators remained dug in on crucial points of any potential deal, jeopardizing additional relief for small businesses and laid-off workers — and all but guaranteeing that senators who had planned to go home for a scheduled recess next week would instead stay in Washington awaiting a deal.

WTI, the benchmark U.S. oil future, traded Wednesday morning at its highest since early March — highlighting how the worst of shale's crisis is seemingly over, though more bankruptcies likely lie ahead.

Why it matters: Its price at the time — $43 — is still too low for many producers to do well, though it varies from company to company.

Noble Corp. wants to pause a multibillion-dollar trial over the 2014 spinoff of Paragon Offshore PLC, a transaction creditors allege loaded up Paragon with old rigs and an unsustainable amount of debt.

London-based Noble, an offshore oil-and-gas drilling rig operator, on Tuesday asked U.S. Bankruptcy Judge David Jones to either pause the lawsuit outright or to expand a bankruptcy stay—a legal shield that halts the lawsuit, brought against Noble for the benefit of Paragon creditors—to include members of its board.

The Ch.11 bankruptcy of California Resources Corp. is becoming an interesting bankruptcy case study. The original RSA was significantly changed only about a week after it was announced. First-priority lien debt holders are getting the same recovery as unsecured noteholders. While the largest oil producer in California was hit hard by lower energy prices and having too much debt, it hopes to emerge a stronger, more viable company after eliminating over $5 billion in debt and raising new capital via a $450 million rights offer.