Sabine bonds retreat further after downgrade; MolyCorp dives; NII cancels unit auction

By Stephanie N. Rotondo

Phoenix, March 17 – Distressed bonds were coming in Tuesday following the equity markets and oil prices.

The pressure on the markets was attributed at least in part to the coming statement from the Federal Reserve following the conclusion of its two-day policy meeting on Wednesday. Investors will once again be looking for clues as to when the central bank plans to raise interest rates.

As for the day’s dealings, Sabine Oil & Gas Corp.’s debt continued to weaken following a downgrade from Standard & Poor’s.

On Monday, the company’s debt had taken a hit after it was announced that a 10-K filing was being delayed and that the company had retained Lazard Ltd. and Kirkland & Ellis to review its strategic options.

S&P dropped its rating on Sabine to CCC from B-, according to a press release published Tuesday. The senior unsecured notes were cut to CC from CCC.

The ratings agency said the changes reflected the belief that the company could face a restructuring in the next year.

MolyCorp Inc.’s 6% notes due 2017 lost nearly half of their value Tuesday after an independent auditor cited concerns about the company’s ability to continue.

The notes were quoted at 8¼ bid, 8½ offered.

Meanwhile, NII Holdings Inc. cancelled an auction for its Mexican unit Tuesday after it received no competing bids to AT&T Inc.’s $1.88 billion proposal.

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