Coal names continue to rally; Caesars mixed, investor weighs options; NII bonds gaining ground

By Stephanie N. Rotondo

Phoenix, June 23 – The coal sector remained on an upward tilt in Monday’s distressed debt market trading.

There hasn’t been any particular news to cause the momentum, but there has been some feeling that coal demand – and therefore prices – are set to rebound.

“They just keep marching up every day of late, slowly,” a trader said.

Elsewhere, Caesars Entertainment Corp. bonds were mixed as yet another bondholder is taking a look at its options in the wake of a property sale that resulted in allegations of fraudulent transfer.

The rumor mill was meantime buzzing that NII Holdings Inc. was planning yet another asset sale. As such, the bonds finished the day with a firm tone.

More gains for coal

The coal space was “rebounding a little bit,” a trader said Monday.

He said Arch Coal Inc.’s bonds improved by a quarter- to a half-point on the day, the 7¼% notes due 2021 at 74½ and the 7¼% notes due 2020 at 75½.

Alpha Natural Resources Inc. paper was also better. The trader placed the 9¾% notes due 2018 at 93¾, up a quarter-point and the 6% notes due 2019 at 75, up half a point.

The 6¼% notes due 2021 rose nearly a point to 73 3/8, he said.

Another market source pegged that issue at 73½ bid, up a quarter-point.

As for Walter Energy Inc., a trader said its 9 7/8% notes due 2020 gained almost 2 points, closing around 62¾. The 8½% notes due 2021 ended up just shy of a point at 57.

Caesars ends mixed

Caesars’ bonds finished Monday’s session mixed as Arrowgrass Capital Partners LLP was said to be weighing its options in regard to its holdings of the 11¼% notes due 2017.

A trader said the 9% notes due 2020 fell half a point to 83 1/8, while the 10% second-lien notes due 2018 dipped that much to 39.

He called the 11¼% notes unchanged at 92.

Another market source deemed the 10% notes up half a point at 40 bid.

Arrowgrass has reportedly engaged law firm Brown Rudnick LLP to look into whether its holdings have a more senior claim on cash from asset sales.

Arrowgrass, however, is said to want to enter into negotiations with the Las Vegas-based casino operator, as opposed to a group of 10% noteholders who are looking to file a lawsuit over a sale of four properties earlier this year.

The group alleges that the sale was a fraudulent transfer that stripped assets from creditors and an already insolvent operating company.

Caesars sold the properties to a newly created affiliate.

NII paper rises

A trader said he was hearing that NII Holdings was set to announce another asset sale soon.

With the rumors circulating about, he saw the bonds rising about a point on the day.

He pegged the 10% notes due 2016 at 31 1/8 and the 7 5/8% notes due 2021 around 29.

The Reston, Va.-based provider of Nextel mobile services in Latin America and Mexico has been struggling to stem subscriber losses while it builds out its new network. As such, the company engaged UBS Investment Bank back in March to look into any strategic opportunities, including asset sales.

The company also hired Rothschild Inc. to review opportunities to improve its long-term liquidity position, including a potential restructuring of debt.

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