Snowstorm weighs on distressed debt liquidity; Cliffs Natural stays in focus, rises again

By Stephanie N. Rotondo

Phoenix, Jan. 27 – There was “limited activity” in the distressed bond market Tuesday “given the snowstorm,” a trader reported.

“We got a bit of a slow start” as some tried to trudge through the snow to get into their offices, he said. But as stocks were “getting hammered, there wasn’t a ton of follow-through in our market.”

But investors continued to eyeball Cliffs Natural Resources Inc.’s debt. On Monday, the company announced a $400 million debt reduction that helped the bonds gain traction. Come Tuesday, the iron ore producer said that its Bloom Lake affiliates had begun restructuring proceedings in Canada.

On that news, the bonds continued to gain ground, according to market sources.

The decision to place the Bloom Lake group into restructuring came after months of looking into the area’s options, including a possible sale, the company said in a press release. The company noted that the area is no longer generating revenue and cannot therefore meet its obligations.

Trading in Cliffs’ common stock was briefly halted ahead of the announcement.

Elsewhere in the world of commodities, oil and gas names were climbing higher as oil prices rebounded.

A source saw SandRidge Energy Inc.’s 7½% notes due 2021 at 67¾ bid, up a point on the day.

West Texas Intermediate crude gained 86 cents, or 1.9%, to end at $46.01 per barrel. Brent crude improved by $1.03, or 2.14%, to $49.19.

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