Distressed market trading still subdued by Sandy impact; TXU bonds rebound; Edison debt holds

By Stephanie N. Rotondo

Phoenix, Nov. 1 - There remained many people out Thursday due to Hurricane Sandy, which left the distressed debt arena muted.

"The focus is somewhat back on new issues," one trader noted. Still, the market continued to be "on the slower side because there is limited participation."

That limited participation has thus resulted in "spotty trading. There are no real price movers."

He also pointed out that it was the first of the month, so some people might also be focusing on wrapping up month-end activities.

Another trader said that offices could be even emptier on Friday, due to fuel rationing in New York.

After dropping 5 to 12 points in the previous session, Energy Future Holdings Ltd.'s debt rallied a bit, according to a trader. The bonds had fallen due to quarterly results and concerns about a looming bankruptcy.

Also in the energy space, Edison International Inc. reported its third quarter earnings shortly after Thursday's close. Ahead of the release, however, the utility's debt was unchanged.

TXU paper rebounds

Energy Future Holdings, or TXU as it is also referred to, saw its debt rally after declining heavily in the previous session.

A trader said the 6.55% notes due 2034 "moved up towards 40," ending at 39 bid, 40 offered. That compared to 36 bid, 38 offered on Wednesday.

The Dallas-based utility reported its seventh consecutive quarterly loss on Tuesday, though the loss was narrower year over year.

The loss was $407 million, versus $710 million the year before.

Revenues dropped almost 25% to $1.75 billion, due in large part to milder summer temperatures.

Still, liquidity was not horrible, with $3.8 billion in cash and equivalents on hand.

But the company continues to labor under a huge mountain of debt - about $37.4 billion - that has resulted in high annual interest expense. As such, concerns about a looming bankruptcy were fueled.

Edison steady ahead of numbers

After the market closed Thursday, Edison International reported its results for the third quarter.

However, ahead of the release, traders said the Edison Mission Energy bonds were unchanged in a 48-49 context.

Those bonds tend to trade in line with one another.

For the quarter, the Rosemead, Calif.-based utility provider posted overall earnings of $190 million, or 58 cents per share, versus $426 million, or $1.31 per share, the year before.

The parent company attributed the decline in earnings to "losses at Edison Mission Group and to a delay in the California Public Utilities Commission final decision on Southern California Edison's 2012 General Rate Case."

For its part, Edison Mission saw a core loss of 28 cents per share, which compared to earnings of a nickel per share for the third quarter of 2011. The swing to a loss was attributed in part to reduced generation and higher fuel prices.

The rumor mill has been chattering for months that Edison International might look to put the Edison Mission unit into bankruptcy, given its $3.7 billion in unsecured debt.

Broad market dealings

Among other goings-on in Thursday's session, a trader said Advanced Micro Devices Inc.'s 7¾% notes due 2020 remained active, but unchanged around 83.

Supervalu Inc.'s 8% notes due 2016 were "a little bit better" at 95½ bid, 96 offered.

The trader also said that ATP Oil & Gas Corp.'s 11 7/8% notes due 2015 were "still" trading at 15 bid, 15½ offered. Another trader quoted the issue at 15 bid, 15¼ offered.

At another desk, a trader said NewPage Corp.'s debt "continues to dribble," seeing the 11 3/8% first-lien notes due 2014 at 48½ and the 10% subordinated notes due 2012 at 51/2.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.