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Distressed market takes another dip; Sun Products bonds retreat; Avaya, Walter, Caesars weaken
By Stephanie N. Rotondo
Phoenix, July 15 – It was another weaker day in the neighborhood for distressed bonds on Tuesday.
Yet again, the stock market ended the session up – albeit barely so – even as Federal Reserve Chairman Janet Yellen said that interest rates would remain low until unemployment and inflation could hit stronger levels.
Yellen also noted that equities were generally not overvalued, but did warn of potential bubbles in sectors like biotechnology and social media, as well as corporate leveraged loans.
Of the day’s distressed dealings, they were few and far between, a trader said.
Sun Products Inc.’s 7¾% senior notes due 2021 were “a little bit lower,” a trader said, after attempting to rally in the previous session.
The trader pegged the notes in an 82 to 83 context, up from the intraday low around 81, but down from around 84 on Monday.
On Friday, Moody’s Investors Service downgraded the laundry detergent manufacturer to B3 from B2. Its unsecured debt was lowered to Caa2 from Caa1.
The trader notes that the bonds had been trading around 86 prior to the rating changes.
Moody’s cited credit metric deterioration due to increased competition in the company’s market as the reason for its actions.
The rating agency maintained that the outlook is negative.
Elsewhere in the world of distressed debt, a trader said Avaya Inc.’s 10½% notes due 2021 were “fairly active,” but down “about a point” at 90½.
He was not sure what had caused the activity and there was no fresh news out on the telephone and data services company.
Meanwhile, Walter Energy Inc.’s 11% PIK toggle notes due 2020 were also softer, trading “closer to 79” than previous levels around 80, a trader said.
And, Caesars Entertainment Corp.’s 10% notes due 2018 were seen off a deuce at 35½ by one market source.
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