Cliffs Natural Resources up ahead of earnings; Arch numbers on tap; Quicksilver, Hercules drop

By Stephanie N. Rotondo

Phoenix, Oct. 27 – Cliffs Natural Resources Inc. was the focus of distressed debt investors on Monday, according to a trader.

“There was not a lot of trades in anything today,” he said.

“It was pretty dead,” said another.

Investors were looking to Cliffs’ earnings release, which came after the market closed. The results were mixed, in as much as revenue fell less than expected, but the company’s net loss was well above estimates.

Going into the release, the iron ore producer’s debt was trading up.

One trader said the 6¼% notes due 2040, however, were off half a point. But the 4 7/8% notes due 2021 rose 1¼ points to 73.

“They were up a little bit,” a second trader said, calling the 6¼% notes “half a point to a point better” at 68.

For the third quarter, Cliffs reported a net loss of $5.88 billion, or $38.49 per share. The loss was much wider than the previous year, due to a $5.7 billion write-down of its coal and iron ore assets.

For the same quarter of 2013, the company posted a profit of $117.2 million, or 66 cents per share.

Revenue declined 16% to $1.3 billion.

Analysts had been forecasting a loss of 7 cents per share, with a 17% year-over-year decline in revenues.

The company has been looking to sell off some of its non-core assets, including its U.S. coal assets. But with Casablanca Capital’s recent shakeup of the board of directors, some are wondering if the activist investors’ goal is to break up the company entirely.

Next up in the earnings roundup is Arch Coal Inc. Those numbers are not expected to be so great either.

Leading up to those results, the coal producer’s debt was weaker on the day.

The 7¼% notes due 2021 fell a point to 39, while the 7% notes due 2019 dropped “almost 3 points” to 40½, according to a trader.

Falling oil hurts energy sector

Elsewhere in the mining arena, Quicksilver Resources Inc. paper was trading down, traders reported.

One trader said the 11% notes due 2021 slipped to a 56 to 58 context, while the floating-rate notes due 2019 ended in a 91¼ to 92¼ range.

Another trader said the 7 1/8% notes due 2016 were unchanged at 25.

There was no fresh news out on the Fort worth-based oil and gas exploration and production company. But crude oil prices fell below $80 a barrel on Monday, putting more pressure on anything energy-related.

Hercules Offshore Inc. paper continued to weaken, for instance. Those bonds have been falling along with oil prices, but were also weighed down by poor earnings last week.

A trader called the 7½% notes due 2021 off nearly 2 points to 65¼, while the 8 7/8% notes due 2021 dropped 2½ points to 67½.

The 10¼% notes due 2019 closed at 74, down 4 points, the trader said.

Paul Deckelman contributed to this article

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.