Alpha Natural debt gains, Patriot Coal bonds slip; Caesars boosted by news of Macau asset sale

By Stephanie N. Rotondo

Phoenix, Aug. 12 - The distressed debt market was firming Monday, though traders lamented that it was "another slow summer Monday."

Coal names continued to be busy, but finished the day mixed. Alpha Natural Resources Inc., for instance, was higher on the day, though Patriot Coal Corp. dipped following news of a settlement with its union.

Caesars Entertainment Corp. was meantime heading upward after the company said it was selling some property in Macau.

Among other distressed credits, a trader said Energy Future Holdings Inc.'s Texas Competitive Electric Holdings Co.'s 15% notes due 2021 were active, but steady around 25 3/8, according to a trader.

Word on the street is that the parent company could be forced into bankruptcy by its senior lenders as soon as November.

Also, a trader said Overseas Shipholding Group Inc.'s 8 1/8% notes due 2018 were "pretty strong," trading around 92½ bid, 93 offered.

Coal arena mixed

The coal sector continued to be volatile in Monday trading.

A trader said Alpha Natural Resources' 6% notes due 2019 and 6¼% notes due 2021 were up a point at 83 and 81 3/8, respectively.

Another market source called the 6¼% notes up half a point at 81 bid.

Patriot Coal, however, was on the weaker side after the company announced it had reached a settlement agreement with its mining workers union.

One market source pegged the 8¼% notes due 2018 at 48 bid, off a point. Another trader quoted the issue at 46½ bid, 47½ offered.

In other coal names, a trader saw Arch Coal Inc.'s 7% notes due 2019 holding around 791/4.

Caesars rises on asset sale

Caesars' bonds were better following news out over the weekend regarding the sale of property in Macau.

One trader called the 10% notes due 2018 up almost half a point at 551/4. Another market source called the debt up almost a point at 551/4.

The Las Vegas-based casino and hotel operator said late Friday that it was selling its golf course on the Chinese-controlled island of Macau to Pearl Dynasty Investment Ltd. for $438 million. The sale could signal that Caesars is growing impatient waiting for rights to operate at the gaming mecca.

Proceeds from the asset sale will be used for capital expenditures and to reduce debt.

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