Global Geophysical drifts lower; NII Holdings' debt declines; James River, Walter tick higher

By Stephanie N. Rotondo

Phoenix, April 10 - It was a fairly mixed day for distressed debt, even as the equity markets tanked.

"The stock market got hit pretty hard at the end of the day," a trader commented.

Still, with a lack of any real news to spur activity, volume was muted.

Global Geophysical Services Inc. saw its 10½% notes due 2017 falling half a point to 541/2. The slip came as prepetition lenders sought to appeal a judge's approval of the bankrupt company's interim use of $25 million of its $60 million debtor-in-possession loan.

The lenders, along with the company's prepetition agent, want the judge to reverse his decision as they allege that the DIP financing includes a nonconsensual priming lien allowing "the loan to be secured by a lien on collateral that will rank senior in priority to appellants' prepetition first priority lien on the same collateral," according to a court filing.

The group said that alternative financing was proposed to avoid putting any risk on the debtholders, but the company opted against it in favor of the DIP facility - though they did so without resolving "many key terms."

Away from Global Geophysical, NII Holdings Inc.'s debt took a hit, despite any news to act as a catalyst.

A trader said the 7 5/8% notes due 2021 got knocked down 1½ points to 27, while the 10% notes due 2016 fell 1¼ points to 383/4.

The 8 7/8% notes due 2019 declined 1½ points to 451/2, he said.

Also on the down side were Verso Paper Corp.'s 8¾% notes due 2019, which fell half a point to 49.

However, James River Coal Co. and Walter Energy Inc. were moving higher. A trader pegged James River's 7 7/8% notes due 2019 at 123/4, up a point day over day.

Walter's 9 7/8% notes due 2020 were meantime up almost half a point to 69 1/8.

HSH gains despite loss

HSH Norbank AG reported a huge loss on Thursday, but its 7.25% perpetual debt rose over 3 points anyway, according to one bond trader.

He pegged the issue at 38. The paper had also gained 4 points in the previous session.

The trader noted that the debt was trading around 32 at the end of 2013.

For the entirety of 2013, the lender - the world's largest financier of ships - posted a loss of €814 million, which compared to a loss of €124 million in 2012. The year marked the largest loss the company has posted since 2008, when the collapse of Lehman Brothers resulted in a loss of €3 billion for the German company.

The containership industry's struggles are what is pressuring the company, as ship charter prices decline and most shipping companies are dealing with an overcapacity of vessels. For its part, HSH cut its shipping portfolio to €21 billion from €23 billion in the fourth quarter and increased risk provisions for that sector to €3.3 billion from €2.7 billion.

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