Distressed debt takes backseat to hurricane cleanup; TXU bonds see big drop following earnings

By Stephanie N. Rotondo

Phoenix, Oct. 31 - The distressed debt arena was subdued Wednesday, as New York and its neighbors began cleanup efforts in the wake of Hurricane Sandy.

As Sandy made her way toward land, the equity markets shut down on Monday and the bond market had only half a day of trading. Tuesday's markets were shuttered completely.

"It was a pretty uneventful day," one West Coast trader said of Wednesday's session. He said many of the "broker's brokers" whom he dealt with were still out.

"It was like the Friday after Thanksgiving," he said. "Stuff just wasn't being done or initiated."

Another trader noted that it was also month-end, so those that did manage to get to their desks were otherwise preoccupied.

"There wasn't a ton going on," he said.

The big mover of the day was Energy Future Holdings Ltd. A trader said the name - also referred to by its former moniker, TXU - was "down a bunch," with the bonds falling 5 to 12 points, just one day after the company reported earnings.

TXU debt nosedives

Energy Future's bonds took a dive Wednesday, following the company's earnings release on Tuesday.

A trader said the paper was down 5 to 12 points on the day, "depending on which flavor you're looking at." The 6.55% notes due 2034 were the "most active issue in that capital structure," the trader said, calling the debt down 10 points at 36 bid, 38 offered.

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.

Kodak up post-operating results

In other earnings news, Eastman Kodak Co.'s 9¾% second-line notes due 2018 were quoted higher, despite a wider monthly operating loss.

A trader said the paper was quoted in the high-60s.

For the month of September, the bankrupt Rochester, N.Y.-based company reported a $136.46 million net loss on $160.6 million in revenues. That compared to a $79.26 million net loss posted for August on $168.42 million in revenues.

AMD, Clear Channel decline

Elsewhere in the high-yield space, a trader said Advanced Micro Devices Inc.'s 7¾% notes due 2020 were "down a point or so," trading around 83.

He also saw Clear Channel Communications Inc.'s 10¾% and 11% "legacy" bonds due 2016 "a smidge weaker" at 73 bid, 74 offered.

© 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.