Distressed debt action muted; Abengoa bonds ‘annihilated’ as creditor protection sought

By Stephanie N. Rotondo

Seattle, Nov. 25 – It was a quiet day for distressed bonds as market players elected to take a break ahead of Thanksgiving, a trader speculated.

“The market kind of shut down early today,” the trader said, even though the markets did not technically have an early close. “The markets have gotten hammered so bad that I think people are trying to put their heads in the sand and go have a nice Thanksgiving with their families and forget about their portfolios because it has been so ugly.”

However, investors could not avoid news that Abengoa SA – a Seville, Spain-based renewable energy company – had filed for creditor protections in Spain.

“I have been told that the bonds got annihilated,” a trader said, who noted that he typically doesn’t deal in the name. But he said that “depending on which flavor,” the company’s debt is into the mid-to-high teens.

Earlier in the session, a market source said the 7¾% notes due 2020 weakened to a 15 to 16 context from levels in the low-40s previously.

Abengoa said its decision to enter creditor protection was due to a nixed financing deal with Gonvarri Corporacion Financiera, which had previously agreed to inject €350 million into the company.

Gonvarri was responsible for cancelling the deal, Abengoa said, though it did not provide a reason for the decision.

Intelsat steadies

Elsewhere in the distressed space, a trader said Intelsat SA’s 7¾% notes due 2021 “continue to be active.”

He said the paper – which has recently been sputtering downward – closed “about unchanged” in a 41 to 42 context.

Meanwhile, Bon-Ton Department Stores Inc.’s 8% notes due 2021 “seemed like it traded up some,” the trader said.

He pegged the issue at 27, “up a couple points.”

Last week, the York, Pa.-based retailer’s bonds got slaughtered in the wake of disappointing earnings. The debt has been creeping down ever since.

Rounding out recently notable names, Peabody Energy Corp.’s 6% notes due 2018 were deemed “a little bit better,” trading “up about a point” to 22¾.

Those bonds started to gain ground on Monday after the company announced asset sales totaling $358 million in cash.

National Bank of Greece slips

National Bank of Greece SA’s $2.25 series A noncumulative preference shares (NYSE: NBGPA) bucked the day’s upward trend, ending the session off 55 cents, or 5.39%, at $9.65.

The Greek bank, which is in the process of a capital raise in an effort to make up a capital shortfall, announced that it is also planning to sell off its stake in its Turkish subsidiary Finansbank.

The unit is valued at €3.4 billion. While no potential buyers or timeframes were noted, Qatar National Bank and Garanti Bank have previously expressed interest in the asset.

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