Alpha Natural, PDVSA rise as commodities win; Clear Channel bucks day's trend, heads downward

By Stephanie N. Rotondo and Paul Deckelman

Phoenix, July 18 - As the broad markets continued to see strength on Thursday, so did the distressed debt market.

One trader noted that gold names in particular were getting boosted. He said the gains in that sector were based on a news story that said the current price of gold - which is over $1,200 an ounce - was above production costs, meaning gold producers won't have to decrease output.

Anything commodity-related in general was firming on the day, like coal producer Alpha Natural Resources Inc. A trader saw the 6¼% notes due 2021 rising a deuce to close at 86.

Another market source pegged the issue at 85¾ bid, up 1½ points.

Earlier in the week, the company said that a subsidiary had halted production at a mine in Pennsylvania, due to adverse conditions at the site's head gate. Management said it could be weeks, or months, until the mine is ready to reopen.

Venezuelan oil company Petroleos de Venezuela SA was also up, as a trader said the 9¾% notes due 2035 were "up big," putting on almost 4 points to finish the day at 811/2.

The trader also saw the 8½% notes due 2017 ticking up half a point to 931/4, while the 9% notes due 2021 earned over 2½ points to close at 861/4.

But though the market was positive on the day, some names did not fare as well.

Clear Channel Communications Inc.'s 7¼% notes due 2017 traded off 2½ points to 71. A trader said the 11¼% notes due 2021 were down a like amount at 106.

Detroit goes bankrupt

A high-yield trader noted the city of Detroit's bankruptcy filing - the largest such municipal filing in U.S. history.

"I think you'll have high-yield guys looking at that, distressed guys."

With bondholders and other unsecured creditors, including municipal union pension funds, all vying for a piece of the relatively small "pie" of assets to satisfy claims totaling more than $18 billion, "it's going to get ugly."

© 2015 Prospect News.
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