Peabody Energy debt improves on asset sale chatter, coal better overall; Caesars bonds move up

By Stephanie N. Rotondo

Phoenix, June 19 – The distressed coal space – Peabody Energy Corp. in particular – continued to gain strength as the week came to a close.

For its part, Peabody Energy bonds improved on reports the company was planning to sell most of its assets in Queensland, Australia.

A trader deemed the 10% notes due 2022 about 1½ points higher at 68 3/8. The 6% notes due 2018 inched up a quarter-point to 54, while the 6½% notes due 2021 increased half a point to 40¾.

The trader also saw the 6½% notes due 2020 rising over 2 points to 43.

Another market source pegged the 6½% notes at 43 bid, up a point on the day.

As for the company’s stock (NYSE: BTU), it jumped 17 cents, or 6.91%, to $2.63.

The potential sale is part of the company’s plan to divest its Australian assets. Even though said mines are cheaper to operate, they also produce lesser quality product.

But the sale could be an uphill battle. There are several assets in the area currently for sale, according to one market source, and not too many interested buyers. However, very few are considered distressed assets, which could work in Peabody’s favor.

Elsewhere in the coal arena, things were just as firm.

A trader said Alpha Natural Resources Inc.’s 6¼% notes due 2021 ended up nearly a point at 10¼.

The trader also said Arch Coal Inc. paper was better.

The 7% notes due 2019 gained half a point to 15, as the 7¼% notes due 2021 moved up almost a point to the same level.

The 9 7/8% notes due 2019, however, dipped half a point to 20.

Another source placed Alpha Natural’s 6¼% notes at 10¼ bid, up nearly a point.

Caesars rises

Caesars Entertainment Corp. and its bankrupt unit, Caesars Entertainment Operating Co. Inc., saw its bonds finishing mostly better Friday, following the trend of the broader market.

A trader said the 10% notes due 2018 inched up a point to 28 – a level echoed by another source.

The first trader also saw the 11% notes due 2021 slipping nearly a point to 87.

Earlier in the week, the Las Vegas-based casino operator’s debt declined as a trustee for CEOC’s first-lien noteholders brought a $6 billion lawsuit against the parent company.

The company placed its operating unit into bankruptcy on Jan. 15. Since then, lawsuits have plagued the company, most of which allege the parent stripped the opco of assets and saddled it with monstrous debt.

The latest lawsuit – brought by the trustee of the first-lien notes, UMB Bank NA – is alleging that the parent company’s attempt to essentially release itself of any guarantee on the opco’s first-lien notes is a violation not only of the Trust Indenture Act of 1939, but also of the indenture itself.

The trustee is seeking monetary restitution equal to the accelerated principal amount of the notes – about $6.35 billion – as well as interest.

© 2015 Prospect News.
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