iHeart, Verso bonds come in; Alpha Natural debt declines; DynCorp steady as S&P reviews rating

By Stephanie N. Rotondo

Phoenix, June 23 – The distressed debt market was mostly steady Tuesday as the broader markets moved into higher territory.

The broader markets were gaining ground as investors hoped for a deal in Greece. A fresh round of economic data – including a rise in new home sales – was also playing a role.

But among the day’s most active issues, there were signs of weakness.

For instance, a trader said iHeartCommunications Inc.’s debt was “down a little bit,” seeing the 14% notes due 2021 at 75 and the 10% notes due 2018 in an 85¾ to 86 context.

Verso Paper Corp.’s 11¾% notes due 2019 were meantime off 3 to 4 points at 59½ bid, 60 offered, according to a trader.

There was no fresh news out on the Memphis-based papermaker.

Alpha Natural slips

In the coal arena, Alpha Natural Resources Inc. bonds were weakening just one day after the company announced it had idled a mill in Kentucky.

A trader said the 6¼% notes due 2021 traded at 9 in the morning, but then came back to close in a 7 to 7½ area.

“So those are down a few points,” he said, deeming the day’s move as “ugly.”

Alpha Natural said it had idled its North Fork No. 7 metallurgical coal mine in Letcher County on Monday. The idling resulted in the termination of 25 employees.

Ending production at the mine was attributed to the declining prices of metallurgical coal.

DynCorp steady

DynCorp International Inc.’s $455 million of 10 3/8% notes due July 2017 shrugged off news that Standard & Poor’s was considering cutting the defense contractor’s credit rating.

A market source placed the issue at 70¾ bid, 71¼ offered, about the same as Monday’s close.

S&P said it was reviewing the company’s ratings – currently B- – due to its concerns about potential refinancing risks.

The refinancing risk is based on what the rating agency called difficult market conditions, which have pushed margins lower and heightened competition. There is also a possibility that DynCorp could lose a significant contract with INL Air Wing.

Though it is expected the company will be able to make its interest payments in the next year, the state of the defense market could dampen refinancing opportunities.

© 2015 Prospect News.
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