Alpha Natural falls on bankruptcy prospects; weaker oil prices weigh on sector; CHC falls

By Stephanie N. Rotondo

Phoenix, July 17 – Commodities continued to be in focus in distressed debt trading on Thursday.

And while the markets were mostly stronger, most commodity-linked bonds did not fare as well.

For instance, Alpha Natural Resources Inc. bonds were coming in after it was reported late Wednesday that the coal producer was looking to line up bankruptcy financing.

The Bristol, Va.-based company is reportedly in talks with loan holders and senior bondholders to line up $300 million to $400 million in debtor-in-possession financing. An official filing could come in early August, right around when certain convertible bonds come due.

The Alpha news – first reported by Wall Street Journal – came after sector peer Walter Energy Inc. filed for Chapter 11 protections on Wednesday. Patriot Coal Corp. sought bankruptcy in May.

News of the potential filing – and overall concerns about depressed coal prices and demand – also weighed on Peabody Energy Corp. debt.

In the oil and gas realm, bonds were drifting lower as West Texas Intermediate crude prices weakened.

Elsewhere, a trader said CHC Helicopter Corp.’s 9 3/8% notes due 2021 traded for the first time in a month, declining over 15 points during that period.

The trader placed the issue at 55, down from 71½ previously.

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