Alpha Natural Resources bonds gain ground; PDVSA rises with the market; broad market mostly up

By Stephanie N. Rotondo

Phoenix, Oct. 1 - It was a holiday for some folks on Monday, meaning there were fewer people at their desks.

That, coupled with an increasingly active new high-yield issue calendar, kept eyes away from the distressed debt market.

"It continues to be the new issue story," a trader said. "Everyone is still searching for yield."

Alpha Natural Resources Inc.'s new 9¾% notes due 2018 were on the active side. The company's older existing debt was not as active, but all issues were firmer.

Meanwhile, Petroleos de Venezuela SA's debt was rising with the overall market, despite fears the company might be depending too much upon its central banks.

A boost for Alpha Natural

Alpha Natural Resources' new 9¾% notes due 2018 - a $500 million deal that priced Friday at 98.959 - were on the active side, traders said Monday.

One trader said about $20 million of the new notes changed hands, calling them up a touch at 99 1/8.

Another trader also pegged the new issue around the 99 mark.

The second trader noted that the Bristol, Va.-based coal producer's older debt - like the 6¼% notes due 2021 - were not that active, but were somewhat stronger around 84.

Another market source deemed the issue up slightly at 83¾ bid.

Alpha Natural intends to use proceeds raised in the bond sale to tender for a portion of its 3¼% convertible senior notes due 2015 and to add liquidity.

PDVSA inches higher

PDVSA was mostly higher on the day, despite a report that shows the Venezuelan-based state-owned oil producer had doubled its dependency on the country's central bank.

A trader said volume in the high-yield space was "dominated" by PDVSA paper, with about $44 million of the 9¾% notes due 2035 trading, up nearly 2½ points to 85 7/8.

Another $33 million of the 8½% notes due 2017 inched up over half a point to 91.

The 9% notes due 2021, however, were unchanged at 861/4, on $22 million traded.

Venezuelan newspaper El Universal published an article last week that showed PDVSA's financial aid from state-owned banks had doubled to $26.5 billion from $12.5 billion the year before. The article noted that the heavy central bank-dependence came despite Venezuelan oil trading at $100 per barrel.

But revenues from PDVSA are used in large part to prop up the country's social programs, which have created a significant drain on the company's balance sheet.

Elsewhere in the oil arena, ATP Oil & Gas Corp.'s 11 7/8% notes due 2015 were "hovering" in a 191/2-20 context, according to a trader.

Another trader said there was a "fair amount" of the bonds trading, seeing the debt move up to 19¾ bid, 20 offered from levels around 19 on Friday.

Broad market mostly up

In the rest of the high-yield space, a trader said Nokia Corp.'s 5 3/8% notes due 2019 earned nearly a point, closing around 841/4.

Another trader said Momentive Specialty Performance Materials Inc.'s 9% notes due 2021 had reversed their recent decline, ending "a little bit better" around 73.

And, Eastman Kodak Co.'s 9¾% second-lien notes due 2018 were "maybe a little bit lower" at 63 bid, 64 offered.

© 2015 Prospect News.
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