Distressed bond market finds strength in wake of Fed news, oil data; Logan’s Roadhouse debt dips

By Stephanie N. Rotondo

Phoenix, June 17 – The distressed debt market saw some improvement on Wednesday, following a trend set by the broader markets.

The gains came as investors digested the latest announcement from the Federal Open Market Committee as it concluded its two-day meeting. After the meeting, Fed officials said that the U.S. economy looked to be recovering from a weak winter and that things appeared on track for an interest rate increase in September.

The committee forecast economic growth of 1.8% to 2% this year. However, that was down from previous estimates of 2.3% to 2.7% growth.

Despite lowering their guidance, a majority of Fed officials signaled their support of a hike later this year.

In addition to the Fed news, the Energy Information Administration issued its weekly crude and gas inventory reports on Wednesday, showing a drawdown of crude stockpiles but a 460,000-barrel increase in gasoline inventory.

The latter came as a surprise, given that the American Petroleum Institute had shown a 2.9 million-barrel decline in its report.

The news didn’t bode well for oil prices, especially given that the ongoing Greek drama has some speculating that oil demand will decrease in the near term.

West Texas Intermediate crude slipped 11 cents to $59.86 a barrel. However, Brent crude rose a nickel to $63.75 per barrel.

Surprisingly enough, the new data – and resulting weaker oil prices – wasn’t weighing on the oil and gas sector all that much.

One trader, for instance, said SandRidge Energy Inc.’s 7½% notes due 2022 were steady and “pretty active” at 51 after the report came out. Halcon Resources Corp.’s 8 7/8% notes due 2020 were also unchanged at 70.

Energy XXI Ltd.’s 9¼% notes due 2017, however, were seen down a deuce at 60.

The coal space was meantime holding its own, following an increase in coking coal prices.

Peabody Energy Corp.’s 6% notes due 2018 improved “almost 2 points” to just over 52, a trader said. The 6¼% notes due 2021 rose nearly a point to 39¾.

But the 10% notes due 2022 “lagged,” according to the trader, ending off a touch at 65.

As for Arch Coal Inc., its 7% notes due 2019 were steady at 16¼.

Logan’s weaker post-numbers

The parent company of Logan’s Roadhouse Inc., LRI Holdings Inc., released its fiscal third quarter results on Wednesday, showing a wider net loss on lower total revenues.

In the wake of the earnings announcement, a trader saw the 10¾% notes due 2017 falling a point to 73¼. At that level, he said, yield was “almost 27%.”

For the quarter, net loss was $6 million. That compared to a loss of $1.7 million the year before.

Total revenue declined 3.6% to $163.6 million and comparable store sales dropped 4.3%.

Adjusted EBITDA was $14 million, a 19% decrease year over year.

Year to date, the Nashville-based restaurant chain’s total net loss has widened to $30.8 million from $22.8 million. Total revenue has slipped 1.4% to $464.1 million.

A conference call to discuss the results will be held on Thursday.

© 2015 Prospect News.
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