Vantage Drilling up as company enters talks, skips payment; Peabody debt reverses course

By Stephanie N. Rotondo

Seattle, Nov. 2 – While the high-yield market at large was on the firmer side as the month began, distressed bonds were trending more toward the weaker side, according to traders.

However, one trader noted that as far as activity went, it was “pretty quiet.”

One of the day’s gainers was Vantage Drilling Co. The offshore oil driller said Monday that it was in talks with creditors in regards to “the terms of a deleveraging transaction.” The company did not elaborate on what that transaction was, but did note that because of the pending event, it would not make an interest payment on its 7½% notes due 2019.

Meanwhile, a trader said Peabody Energy Corp. debt “rebounded a smidge,” though on no specific news. The bonds had been pressured last week in the wake of the company’s earnings release.

Vantage skipping coupon

Vantage Drilling announced Monday that it was in discussions with an informal group of senior secured term loan lenders and secured noteholders on a “deleveraging transaction.”

The company also said that it had not made a nearly $41 million interest payment on its 7½% notes due to the talks.

Though the Cayman Islands-based company did not disclose what the deleveraging transaction looked like, the 7½% notes were moving up on the day.

One trader saw the bonds putting on a point to close at 30½. A second trader said the paper was trading “around 30,” which he said “maybe looks a smidge better.”

In its announcement, Vantage said that “it continues to maintain ample liquidity to maintain efficient operations world-wide, with more than $200.6 million of available cash on hand.”

Peabody rebounds

Peabody Energy bonds were “better” in Monday trading, according to a trader.

He saw the 6% notes due 2018 ending around 20, which was up from a 17 to 18 context previously. The 10% second-lien notes due 2022 meantime closed with a 28 handle, up from 27.

At another desk, however, the debt’s performance was given a different review.

A trader said the 6½% notes due 2020 were off nearly half a point at 14 5/8, while the 6¼% notes due 2021 firmed up almost a point to 15¼.

There hasn’t been any fresh news out since the company announced its third-quarter results on Tuesday.

Peabody reported a loss of $304.7 million for the third quarter. That equated to a loss per share of $16.73.

In the same period of 2014, net loss was $150.6 million, or $8.44 per share.

On an adjusted basis, EBITDA was $129 million and adjusted loss per share was $8.13.

Revenue was down year over year at $1.42 billion from $1.72 billion.

Analysts polled by Zacks Investment Research had forecast a loss per share of $8.20 on revenue of $1.37 billion.

Peabody also lowered its guidance on production, stating that it “expects additional coal production curtailments in response to current prices,” in the earnings announcement.

“In addition, limited capital spending is anticipated to act as a future supply constraint,” the company said. “Industry reports indicate a 70% decline in capital investment from the top coal producers from recent highs in 2012. The company anticipates that coal prices will need to rise well above current levels to incentivize new investment to maintain adequate supply to meet seaborne demand over time.”

Intelsat leaking

Intelsat SA paper “continued to leak” following last week’s announcement of quarterly results, a trader said.

He pegged the 7¾% notes due 2021 at 59. A second trader placed the issue at 58¾, down over a point.

On Thursday, the Luxembourg-based satellite services provider reported net income of $78 million, or 66 cents per share, on revenue of $580.8 million.

Revenue was down about 4.5% year over year.

On an adjusted basis, earnings per share came to 85 cents.

Adjusted EBITDA was $458.1 million, or 79% of revenue.

Wall Street had forecast adjusted EPS at 39 cents on revenue of $582.5 million.

Intelsat also affirmed its guidance for 2015. The company is expecting to post full-year revenue of $2.33 billion to $2.38 billion. Adjusted EBITDA is forecast between $1.81 billion to $1.86 billion.

National Bank of Greece eyed

There was a bit of action in National Bank of Greece SA’s $2.25 series A noncumulative preference shares (NYSE: NBGPA) on Monday.

The paper was trending weaker on the day as the market digested word of Greece’s stress test results, as well as a slew of debt exchange offers from each of the country’s major banks.

The preference shares closed down $1.64, or 15.43%, at $8.99.

According to results out Saturday, Greece’s four major banks – National Bank of Greece, Piraeus Bank SA, Eurobank Ergasias SA and Alpha Bank AE – have a combined capital shortfall of €14.4 billion. As such, each of them has submitted a capital plan that includes exchanging debt in order to shore up its bottom line.

For its part, National Bank of Greece has a €4.6 billion shortfall and intends to swap €803 million of senior and junior debt for new stock.

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