Peabody falls as lenders hire legal counsel; AK Steel soft; Intelsat drops; Abengoa jumps

By Stephanie N. Rotondo

Phoenix, Sept. 24 – The distressed debt market retreated again on Thursday, continuing a trend seen for most of the week.

“Just a lot of stuff was weaker today,” a trader said.

Another trader noted that there was “a huge bid list out there in high yield,” adding that as a result, “there was a heavy tone to a lot of stuff.”

Peabody Energy Corp. bonds were coming in after it was reported late Wednesday that the company’s senior lenders had hired legal counsel to advise them in a potential restructuring.

A trader said Peabody Energy bonds “continue to weaken.”

Also in the commodity space, AK Steel Holdings Corp. continued to be soft.

Intelsat SA was also among the day’s losers. The bonds began to drift down on Wednesday on news the company had hired Goldman Sachs & Co. to explore potential asset sales.

While most of the distressed arena was down, Abengoa SA paper got a huge boost – anywhere from 15 to 30 points – as the Seville, Spain-based renewable energy company laid out a capital plan and said that it had signed on underwriters for a €650 million share sale.

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