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Peabody, Arch take a beating on possible hikes in liability rates; market ends week lower
By Stephanie N. Rotondo
Phoenix, June 12 – As the week came to a close, distressed debt investors were keeping an eye on the coal sector as “there was coal news going around again,” a trader said Friday.
The news specifically involved Peabody Energy Corp. and Arch Coal Inc. and whether or not the companies will have to pay more for mine liability insurance.
Peabody’s debt was “getting bamboozled again,” the trader said.
As for Arch Coal bonds, the first trader said the name wasn’t as active, but still weakened.
The news – first reported by Bloomberg – was also putting significant pressure on the companies’ stock.
Peabody’s equity (NYSE: BTU) ended down a quarter, or 8.99%, at $2.53 Arch Coal’s stock (NYSE: ACI) declined 5.28 cents, or 12.03%, to 38.61 cents.
Elsewhere in the distressed space, bonds were ending the week mostly in negative territory.
Verso Paper Corp.’s 11¾% notes due 2019, for instance, were seen falling 3½ points to 66. There was no fresh news to act as a catalyst.
Swift Energy Co.’s 7 1/8% notes due 2017 meantime drifted down over 2 points to 69¼, according to a trader.
In the retail arena, Chino’s Intermediate Holdings A Inc. – the indirect parent of J. Crew Group Inc. – saw its 7¾% senior PIK toggle notes due 2019 coming in a touch to 81¾.
Claire’s Stores Inc.’s 9% notes due 2019 finished off over a point at 86½.
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