Walter Energy bonds on the decline; Sears debt weakens again; topical names remain in focus

By Stephanie N. Rotondo

Phoenix, Sept. 17 – The distressed debt market was on the rise Wednesday as the Federal Reserve gave an indication of when it planned to raise interest rates.

In its statement after its monthly meeting, the Fed said that it would keep interest rates at lower levels for “a considerable time,” choosing to hike rates once data supports doing so and not focusing on a specific calendar date.

Of the day’s dealings, the coal sector was under pressure, but none more so than Walter Energy Inc. The company has been struggling as energy companies look to cheaper coal, such as that found in the Illinois Basin. Walter mines the Appalachian region.

Sears Holdings Corp. meantime continued to slide, just one day after the company announced it had secured a $400 million loan from its chief executive officer.

Most of the activity in the distressed debt market was focused on names that have been topical of late.

The Gymboree Corp. “continued to creep higher” on Wednesday, with one trader pegging the notes in a 36 to 37 context.

NII Holdings Inc. meantime continued to gain ground after the company’s bankruptcy filing on Monday.

Also in focus were Colt Defense LLC’s 8¾% notes due 2017, which a trader called “pretty topical” after falling post-numbers, referring to the company’s latest quarterly results.

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