Trading muted amid East Coast snowstorm; Arch Coal ticks higher; market sees firm tone

By Stephanie N. Rotondo

Phoenix, Jan. 3 - A snowstorm on the East Coast was weighing on already low trading volumes in the distressed debt space Friday, though the market continued to have a "better bid," according to a trader.

"The market got a late start [due to the snow] and never really got going," he said. "There is no real volume in any high-yield names and certainly not really any in distressed."

"Everyone is pretty much half-staffed with the snow," said another market source.

Despite the limited volume, Arch Coal Inc. was seen pushing higher. A trader said the St. Louis-based coal producer's bonds were up about a point, pegging the 7¼% notes due 2021 at 78¼ and the 7% notes due 2019 at 801/2.

Coal stocks have been inching higher of late, and with natural gas inventories shrinking, some believe demand for coal could also go up. That could help coal companies - many of which are highly leveraged - deal with any balance sheet issues.

Meanwhile, J.C. Penney Co. Inc.'s 5.65% notes due 2020 were also climbing. One trader said the issue was at 79, a level echoed by another market source.

"They have been kind of trading in the high-70s," the first trader said. The paper has been "slowly creeping up."

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