Distressed debt market closes with softer tone; Alliance One pops on earnings; coal weaker

By Stephanie N. Rotondo

Phoenix, June 9 – The distressed debt market took yet another hit Tuesday, despite a U.S. wholesale inventories report that showed gains – due in part to stabilizing oil prices – and a Labor Department report showed that job openings were outpacing hirings.

But investors weren’t as much focused on data as they were on a looming interest rate hike and the ongoing Greek saga.

A trader noted that Greek officials are seeking to extend its current bailout terms until March 2016. If that isn’t approved, the nation has three weeks to work out some other deal with European leaders.

Should the country fail to get a deal done, that could mean a hefty increase in volatility, the trader said.

Meanwhile, a job turnover report is expected to come out Thursday – the last such report the Federal Reserve will see ahead of their next meeting, at which point many expect the central bank to move forward with a rate increase in September.

“Things in general were weak,” one trader remarked.

However, the weakness wasn’t hitting everyone the same.

Alliance One International Inc. saw its bonds pop after the company reported earnings. One trader said the name was also quite active.

Meanwhile, the coal arena was down in the dumps yet again as the industry was seen losing a fight against the federal government. A lawsuit brought by Murray Energy Inc. and others within the sector aimed at nixing new Environmental Protection Agency rules was dismissed on Tuesday, as judges deemed the effort as premature.

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