Quarter-end trading focuses on new issues, not distressed bonds; Algeco higher post-numbers, CEO exit

By Stephanie N. Rotondo

Seattle, March 31 – As the first quarter came to an end, the distressed debt market was taking a backseat to the high-yield market’s $5.23 billion of new notes issued by Western Digital Corp. on Wednesday.

“The day was dominated with new issues like Western Digital,” a trader said.

“There was decent volume, I guess,” another trader commented. He also specifically pointed to Western Digital, noting that trading in the two-tranched issue made up about $400 million of total volume for the day.

But new issues aside, some distressed debt activity managed to eke out.

Algeco/Scotsman Holding Sarl was inching up, just one day after the company reported earnings. The report showed lower revenue and a narrower loss.

But on the heels of the quarterly results, the company announced that its chief executive officer was resigning and that it had hired advisers to look into ways to improve liquidity and “to conduct a review of its current financing.”

Meanwhile, traders saw strength in AK Steel Holdings Corp.’s debt, though there was no fresh news to act as a catalyst.

One trader said the 7 5/8% notes due 2020 were “up a little bit more” at 62. Another market source pegged that issue at 62¾ bid, which was a gain of over a point.

A third trader said the 7 5/8% notes due 2021 added a point to close at 56¾.

Elsewhere in the commodity space, a trader said he saw oil and gas producer Chaparral Energy Inc.’s 7 5/8% notes due 2022 move up slightly to 19 1/8.

“That’s a rare sighting there,” he said.

On Wednesday, the Oklahoma City-based company said in a regulatory filing that it was staring down a default and that a bankruptcy filing was being considered.

Also in energy names, a trader said there was “ETF activity” in GeNon Energy Inc.’s 9 1/8% notes due 2020.

He said the bonds fell a point to 64¾.

Algeco up as CEO exits

Algeco/Scotsman’s 10¾% notes due 2019 were heading higher Thursday.

One trader said the bonds were a point better at 30, though he added that the paper hadn’t traded in a week.

Another trader said the notes were “pretty active,” trading “+/-30.” That compared to a 29 to 29½ context previously.

“They had numbers out,” a trader noted. “It prompted a lot of activity, but I wouldn’t say there was much price movement.”

On Wednesday, the Baltimore-based provider of space and storage solutions reported its latest quarterly results. For the year, revenues slid to $1.55 billion from $1.73 billion the year before.

Gross profit came to $545.24 million, down from $634.33 million. Net loss widened to $363.09 million from $339.57 million.

Come Thursday, the company had more news to announce: Jean-Marc Germain, chief executive officer, was stepping down from his post, effective April 30.

According to a company news release, Germain is considering another leadership role at “a large global company.” He is also expected to remain in an advisory role until July 2016.

The company hopes to have a successor by the end of April.

In addition to announcing the CEO’s departure, Algeco said that it had hired PJT Partners Ltd. as financial adviser and Kirkland & Ellis LLP as legal adviser to help the company improve its bottom line.

© 2015 Prospect News.
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