Distressed debt players eye Hi-Crush; Hexion’s 2020 notes mixed; Navios Maritime gains

By Abigail W. Adams

Portland, Me., Oct. 22 – The distressed debt space launched the week with low trading volume with the majority of activity belonging to straight high-yield names.

However, one high-yield name was on the radar of distressed debt players as a credit that could crack in the near future.

Hi-Crush Partners LP’s 9½% senior notes due 2026 saw heavy-trading volume with the notes firming as its equity tanked after reporting earnings prior to the market open.

The 9½% notes have struggled since pricing in July and could fall into distressed territory, a market source said.

Hexion, Inc.’s senior notes maturing in 2020 remained in focus after active trading last week.

The first-lien notes continued to post gains while the second-lien notes again saw losses as second-lien noteholders prepare for negotiations.

Navios Maritime Holdings’ 7 3/8% senior notes due 2022 gained in light trading volume on Monday. There has recently been a reshuffling of ownership in the shipping company’s subsidiaries.

Hi-Crush eyed

Distressed debt players were eyeing Hi-Crush’s 9½% senior notes due 2026 as the notes saw active trading volume post-earnings.

The 9½% notes gained in the high-volume activity. The notes were up about 1 point to trade just south of 92 with $18.5 million bonds on the tape by the late afternoon, a market source said.

However, the notes were firming largely due to a credit versus equity trade, a market source said.

Hi-Crush’s equity dropped more than 5% on Monday after the company announced third-quarter earnings and slashed its quarterly dividend by more than 50 cents prior to the market open.

Given the circumstances, “people were viewing the credit favorably,” the source said.

However, Hi-Crush’s earnings “were abysmal,” with the company missing analyst expectations for EBITDA by a large amount, the source said.

Hi-Crush reported adjusted EBITDA of $49 million to $51 million for the third-quarter.

The proppant and logistics service provider to the petroleum industry has a business “that could be cracking,” a market source said.

The proppant sector as a whole has been under pressure with massive supply coming online, the source said.

The 9½% notes have been under pressure since Hi-Crush priced the $450 million issue at par in late July. The deal attracted a lot of fast-money, a market source said.

“It doesn’t seem like they have the most supportive holders,” the source said.

Hexion mixed

Hexion’s senior notes maturing in 2020 remained in focus on Monday with the second-lien notes continuing to slip and the first-lien notes continuing to gain.

The 6 5/8% first-lien senior notes due 2020 were seen ½ point higher to close the day at 91¼, a market source said.

The notes returned to their previous levels after they were pushed down in high-volume activity last week.

The 9% second-lien senior notes due 2020 slid another ¼ point to 72. The notes have steadily trended downwards since last week.

The 2020 notes have been in focus since holders of the 9% notes hired law firm Milbank, Tweed, Hadley & McCloy in anticipation of upcoming negotiations regarding the 2020 bonds, a market source said.

The chemical manufacturer’s first- and second-lien notes have different groups of holders.

Holders of the first-lien notes see it as a safer spot in the capital structure with a decent yield.

They were taken by surprise when the second-lien note holders began to organize for negotiations.

“The seconds crept up out of nowhere with the adversarial talk,” a market source said.

Navios gains

While trading volume was light, Navios Holdings’ 7 3/8% senior notes due 2022 were making gains in the secondary space.

The 7 3/8% notes climbed ¾ point to 77 5/8, a market source said.

The rise on Monday came after the senior notes trended lower for the past two months.

As the seaborne shipping and logistics company senior notes rose, so too did its equity, closing the day up more than 16%.

Navios recently announced a series of reshuffling of its subsidiaries.

In early October, Navios Maritime Acquisition Corp. announced that it will acquire all publicly held units of Navios Maritime Midstream Partners L.P.

Navios Partners announced last week it will distribute 2.5% of the equity of Navios Containers to unit holders of Navios Partners in connection with the listing of Navios Containers on a stock exchange.

The distribution will give Navios Partners a 33.5% stake in Navios Containers, according to a company release.

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