Peabody’s planned issue said to prompt concerns; Energy XXI weakens after second-lien call

By Stephanie N. Rotondo

Phoenix, March 4 – The distressed debt market continued to focus on the energy space, as several names are looking to shore up its resources by issuing new debt.

On Monday, Peabody Energy Corp. launched a roadshow for a $1 billion offering, the proceeds of which are slated to fund a tender offer. But come Wednesday, traders were seeing signs that the new deal might already be in trouble.

The 7 3/8% notes due 2018, which are the subject of a tender offer, were called down over a point at 108.

“I guess that new deal is weighing on the bonds,” the trader said.

Also on Wednesday, Energy XXI Ltd. held a conference call to discuss a proposed $1.25 billion offering of second-lien notes.

Though both of these issuers are planning to reduce their debt in one way or another via proceeds from the debt offerings, investors appear to be waiting to go skipping along to the bank and all of said issuers debt was seen drifting lower in midweek trading.

Elsewhere in the distressed space, a trader said Getty Images Inc.’s 7% notes due 2020 “continue to be weaker,” pegging the paper at 58˝.

He deemed the level down 3 points from previous trades, though he said there was no fresh news to spark the decline.

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