Distressed bonds rise with equities, but focus on new issues; coal sector stays under pressure

By Stephanie N. Rotondo

Phoenix, April 9 - The distressed debt market followed the equity markets higher in midweek trading.

However, a trader said the focus remained on new high-yield issues, adding that there was also very little news to spur much movement.

"Absent some new information or catalyst out there, there's not a lot of volatility," he said.

Though the day had a generally firmer tone to it, the coal space was trending toward the mixed side of things.

According to one source, there was another round of coal downgrades during the session. But that news didn't spur as much activity as he would have thought.

The downgrades came from UBS AG and were specific to the stock. Walter Energy Inc., Alpha Natural Resources Inc. and Arch Coal Inc. were all affected.

One trader said Walter Energy's 9 7/8% notes due 2020 rose almost a point to end around 70, but another called the issue "a smidge lower" around 681/2.

Another trader said Alpha Natural Resources' 6¼% notes due 2021 inched up nearly a point to 771/2, but Arch Coal's 9 7/8% notes due 2019 fell a like amount to 883/4.

In James River Coal Co. debt, a trader deemed the 7 7/8% notes due 2019 off about a point to 113/4. Another trader pegged the paper in a 12 to 12½ context.

The company filed for Chapter 11 protections on Monday. On Tuesday, Moody's Investors Service downgraded the coal producer to Ca from Caa2 and Standard & Poor's followed suit on Wednesday, dropping its rating to D from CCC.

Trading in Caesars Entertainment Corp. bonds meantime continued to stay on the busier side, though the debt was mostly unchanged on the day, stemming two days of wobbly trading.

A trader said the 10% notes due 2018 held in at 47 3/8, while the 8½% notes due 2020 were steady at 853/4. The 11¼% notes due 2017 were likewise unchanged at 95, but the 9% notes due 2020 were "up marginally" at 86 5/8, the trader said.

Another trader called the 10% notes "pretty much unchanged" at 471/2.

© 2015 Prospect News.
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