Freeport bonds continue rally as copper improves; iHeart debt busy on talk of refi plans; MEG drops

By Stephanie N. Rotondo

Seattle, Feb. 4 – Freeport-McMoRan Inc. again dominated the distressed landscape on Thursday, as rising copper prices gave the bonds – and the stock – a lift.

A trader said there was “heavy volume” in the name, seeing the 3.55% notes due 2022 rising over 3 points to 48½. Both the 2 3/8% notes due 2018 and the 5.45% notes due 2043 were up a similar amount, he said, at 69 and 44½, respectively.

The 3 7/8% notes due 2023 meantime added 4½ points, closing at 49¼.

Another trader said the bonds were “up a few points,” seeing the 3.55% notes trading into the high-40s from the mid-40s previously.

As for the equity (NYSE: FCX), it gained 87 cents, or 17.94%, to end at $5.72.

The mining company’s bonds have been on a ride in the last week. First, the debt got toppled on the heels of weak earnings and a subsequent significant downgrade by Moody’s Investors Service. But then the bonds began to rally.

Said rally has only been furthered by a rebound in copper prices. On Thursday, copper firmed over 1% for the day, hitting a new high for 2016.

iHeart active

Another notable name for the day was iHeartMedia Inc., as Bloomberg reported that the San Antonio-based multimedia company was working on a plan to retire $1.4 billion of its debt maturing before 2019.

“[The bonds] opened up really widely quoted, but I thought they were unchanged,” a trader said. “[The activity] appears to be much ado about nothing.”

He saw the 9% notes due 2021 holding at 63 3/8. The 10% notes due 2018 were likewise “right on top of where they were” at 41.

However, another trader deemed the debt “a little better.” He also placed the 10% notes at 41, which he called “up a couple points.”

One plan the company is reportedly considering is a debt exchange of debt held by the parent company for new debt held by a subsidiary. Under another plan, that same subsidiary would sell additional securities and the company would use those proceeds to buy back debt in the open market.

The company, formerly known as Clear Channel Communications Inc., has not posted a profit since 2007.

MEG paper hit hard

Canadian oil sands producer MEG Energy Corp. saw its bonds tank after it released its latest quarterly report.

A market source pegged the 7% notes due 2024 a 39 bid, off 12½ points on the day.

For the fourth quarter, MEG posted a net loss of C$297.3 million, or C$1.32 per share. That compared to a loss of C$150.1 million, or C$0.67 per share, the year before.

The operating loss came to C$140.2 million. For the same quarter of 2014, the company had seen an operating profit of C$8.1 million.

MEG attributed its wider losses to weak oil prices and a strong U.S. dollar.

Elsewhere in the oil and gas space, EP Energy Corp.’s 9 3/8% notes due 2020 also experienced a sizeable loss, though there was no news out to act as a catalyst.

A trader saw the notes sliding “6 and change” points to 30¼.

“That’s a big move,” he said.

© 2015 Prospect News.
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