Alpha Natural loss beats expectations, bonds rise; Caesars up with market; NIHD, TXU unchanged

By Stephanie N. Rotondo

Phoenix, Feb. 12 - The high-yield bond market was higher Wednesday and that strength bled a little into the distressed debt realm.

However, a trader noted that he "didn't see much distressed [activity] going on."

Alpha Natural Resources Inc. was a topical name, as the company released earnings that at least somewhat beat expectations. As a result, the coal producer's debt got a 1- to 11/2-point boost.

Caesars Entertainment Corp. was also edging up a touch. The name is considered highly liquid and usually moves in line with the market, barring any credit-specific news.

Though there was a generally firm tone to the marketplace, a lot of distressed credits ended the day unchanged. NII Holdings Inc., for instance, was mostly steady and the same went for Energy Future Holdings Corp.

Alpha's loss beats estimates

Alpha Natural Resources posted fourth-quarter earnings Wednesday and the figures managed to somewhat beat expectations.

Given that, the bonds were moving higher, according to traders.

One trader said the debt was generally up about a point, the 6¼% notes due 2021 at 81¾ and the 6% notes due 2019 at 823/4.

The trader did note that the 9¾% notes due 2018 were off slightly at 103 7/8.

Another market source pegged the 6¼% notes at 81¾ bid, up almost a point.

At another desk, a trader said the 6¼% notes were up "about a point" at 81¾ bid, 82 offered, while the 6% notes closed around 821/2.

For the quarter, the Bristol, Va.-based coal company reported a loss of $358.8 million, or $1.62 per share. For the same quarter of 2012, the loss was $127.6 million, or 58 cents per share.

On an adjusted basis, the company reported a loss of 52 cents per share, better than the 64-cents-per-share loss analysts polled by FactSet were expecting.

Revenues took a big hit though, falling 30% to $1.09 billion. Expectations were closer to $1.18 billion.

The lower revenues were blamed in part of fewer shipments.

The company sold 20.6 million tons of coal during the quarter, compared to 25.9 million tons the year before.

Additionally, prices on average were much lower than the previous year, with the weighted average coal margin price per ton at $4.57 versus $17.45.

Alpha Natural said it expected the decline in demand to continue, revising its 2014 forecast to between 77 million and 90 million tons sold. Before that revision, the forecast was for 79 million to 90 tons.

Elsewhere in the coal sector, a trader said Walter Energy Inc. "continued to be active" as the bonds "rebounded a little bit from their lows."

The trader said the 9 7/8% notes due 2020 rose to 72½ from a low of 70½ to 71 on Tuesday.

Another trader called the issue up almost 2 points at 723/4.

Caesars ticks up

A trader said Caesars' 10% notes due 2018 inched up a quarter-point to 491/2.

Another market source pegged the debt at 49¾ bid, also up a quarter.

There was no fresh news out Wednesday about the Las Vegas-based casino operator, though earlier in the week news outlets reported that the company had hired Lazard Bank Ltd. as a restructuring advisor. The company is hoping to figure out how to manage its about $24 billion of debt, though it has said that a bankruptcy filing is not on the table.

NIHD, TXU stand their ground

NII Holdings was mostly unchanged on the day, according to a trader.

The trader saw the 8 7/8% notes due 2019 holding steady at 54, while the 10% notes due 2016 held in at 661/2.

He said the 7 5/8% notes due 2021 slipped 1½ points to 461/4, however.

"NIHD was, for the most part, unchanged, but somewhat active," another trader said.

Energy Future Holdings was also on the "mostly unchanged" list. A trader saw the 10% notes due 2021 at 105 bid, the 15% notes due 2021 straddling 30 and the 10 ¼% notes due 2015 in a 5 to 6 context.

A second trader saw the 10% notes of 2021 at 105 as well, deeming the paper "fairly active."

On Tuesday, it was reported that the company is looking to line up bankruptcy financing.

YRC facility frees up

YRC Worldwide Inc.'s credit facility freed up for trading, with the $700 million five-year senior secured term loan (Ba3/CCC+) quoted at par ¼ bid, par ¾ offered, according to a trader.

Pricing on the term loan is Libor plus 700 bps with a 1% Libor floor and it was sold at an original issue discount of 99. There is soft call protection to 102 in year one and 101 in year two.

Recently, the spread on the term loan was increased from Libor plus 675 bps and the call protection was changed from just 101 for one year.

The company's $1.15 billion credit facility also includes a $450 million ABL revolver.

Credit Suisse Securities (USA) LLC and RBS Citizens are leading the deal that will be used to refinance existing bank debt.

YRC is an Overland Park, Kan.-based less-than-truckload carrier.

Sara Rosenberg contributed to this article

© 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.