Cliffs Natural holds ahead of earnings; Magnetation sinks; Alpha Natural results on tap

By Stephanie N. Rotondo

Phoenix, April 28 – The distressed debt market continued to keep an eye on new and upcoming earnings during Tuesday’s session.

Cliffs Natural Resources Inc. published its first-quarter results after the market closed, posting a wider loss.

Ahead of the release, the iron ore producer’s debt was “holding up,” a trader said.

Also in the iron space, a trader said Magnetation LLC’s 11% notes due 2018 “got hammered,” falling to 23 from previous levels in the low-30s.

The trader attributed the decline to news that AK Steel had written down the value of its joint venture with Magentation Inc.

In turn, the write-down resulted in a wider loss for AK Steel at $306.3 million, or $1.72 per share. The year before, the company had reported a loss of $86.1 million, or 63 cents per share.

“I guess they don’t think highly of the prospects of that business,” a trader said of the write-down news.

Meanwhile, investors are gearing up for Alpha Natural Resources Inc.’s own earnings release on Thursday. Investors might be anticipating a weak quarter, as the bonds have been under pressure of late.

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