CHC Helicopter weakens post-earnings; MolyCorp dives; Verso rises on upgrade; Puerto Rico eyed

By Stephanie N. Rotondo

Phoenix, June 30 – The broader markets were moving up Tuesday on hopes Greece could get a last-minute debt deal together, but that wasn’t helping some distressed bonds all that much.

For instance, CHC Helicopter bonds took a hit after its parent company, CHC Group, reported quarterly and annual financial results that were worse year over year.

MolyCorp Inc. – the rare earth metals mining company that filed for bankruptcy last week – was also quite a bit lower.

But on the plus side, Verso Paper Corp. was moving upward following a rating upgrade from Standard & Poor’s. The bonds had been on the decline recently, though on no fresh news.

In distressed municipal debt Puerto Rico’s general obligation debt “remained active,” a trader said. S&P cut the island’s rating on Tuesday, following a similar move by Fitch Ratings on Monday.

CHC numbers disappoint

CHC Helicopter’s 9¼% notes due 2020 declined Tuesday after the parent company held a conference call to discuss its latest financial results.

Earnings for the fiscal 2015 fourth quarter and for the year were released Monday and the call was scheduled for early Tuesday.

A trader saw the bonds dropping 4½ points to 73¼. Another trader pegged the issue at “+/-73,” which he said was “down a couple points.”

For the fiscal fourth quarter, the Vancouver, B.C.-based company saw revenue fall to $374 million from $453 million. The decline was attributed to currency translation as the dollar strengthened.

Net loss was $119 million, or $2.15 per share. That compared to a net loss of $26 million, of 29 cents per share, the year before.

On an adjusted basis, net loss was $32 million, or 55 cents per share, versus $14 million, or 17 cents per share, the previous year.

For the full fiscal year, revenue slid to $1.7 billion from $1.76 billion. Net loss widened to $795 million, or $11.17 per share, from $171 million, or $3.09 per share.

Adjusted net loss was $123 million, or $1.82 per share. By comparison, the adjusted loss was $97 million, or $1.24 per share, for the prior fiscal year.

For the quarter, the adjusted loss excluded special items, including a $77 million restructuring charge.

MolyCorp drops

A trader said MolyCorp’s 10% notes due 2020 were “down 13 points from mid-last week,” ending at 22.

Another trader also deemed the debt “lower,” placing the issue in the low-20s.

The Greenwood Village, Colo.-based company filed for bankruptcy protections on Thursday after announcing it had inked a restructuring agreement with holders of the 10% notes.

However, on Friday, Christopher Sontchi, the bankruptcy judge overseeing the case, ruled against the company as it sought to tap $44 million of its $225 million financing package. Sontchi sided with creditors such as Oaktree Capital Management, which alleged that the company did not actually need the money.

Verso upgraded

Verso Paper’s 11¾% first-lien notes due 2019 were boosted by about a point on Tuesday following an upgrade from S&P.

One trader pegged the bonds at 58¼, while another saw the issue trading with a 58 handle.

S&P upped its rating on the Memphis-based papermaker to B- from SD. The senior debt was upped to B- from CC and the junior debt to CCC from D.

The rating agency said that while it expected Verso – which is in process of integrating NewPage Corp. into its company – to remain highly leveraged over the next year, but that the transition with NewPage should go smoothly.

Puerto Rico eyed

Even after the dust settled on Puerto Rico Gov. Alejandro Garcia Padilla’s announcement that the island commonwealth will be unable to repay $72 billion of public debt, Puerto Rico G.O. prices continued to tumble.

The commonwealth’s 8% notes due 2035 were seen at 68, with a 12.347% yield-to-maturity, at the close of Tuesday’s session. The yield was as high as 13.028% in morning trading.

At one shop, a trader said the debt was “active,” with the paper trading down into the mid-60s. However, he said that the notes “maybe rebounded a little bit,” closing in the high-60s.

He deemed that “probably unchanged” on the day.

At market close Monday, the 8% notes were at 69.75, 12.028% yield-to-maturity, backing off from a high yield of about 12.255%.

Elsewhere in Puerto Rico news, S&P lowered its rating on the commonwealth’s G.O. debt to CCC- from CCC+. This move follows Fitch Ratings’ decision Monday to cut all Puerto Rico debt to CC from B.

Much like Fitch, S&P placed all of the commonwealth’s debt at the CCC- level.

In a report released Tuesday morning, S&P said all of Puerto Rico’s debt obligations are potentially at risk for possible restructuring due to the severity of its current fiscal situation.

So far, Moody’s Investors Service, which downgraded the commonwealth to Caa1 from B2 back in February, has taken no ratings action.

Sheri Kasprzak contributed to this article

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