Murray Energy debt firms amid overall subdued summer trading; Key Energy dips; Fannie, Freddie gain

By Stephanie N. Rotondo

Seattle, Aug. 25 – The distressed debt market again saw muted trading on Thursday, attributed largely to it being the end of summer.

“Nothing was active,” a trader said of the day’s session. “It’s just brutal this week, brutally slow.”

Of the distressed issues eyed, energy names continued to take center stage. However, the most popular names in Thursday trading were more off-the-run issues than the typical go-to traders.

For instance, a trader said Murray Energy Corp. was the most active name in the distressed space, as its 11¼% notes due 2021 ticked up “a few points” to 44½.

Another trader also placed the paper around the 44½ level, calling that up over 4 points on the day.

Last week, the name had gained traction on word it had secured some credit amendments. The St. Clairsville, Ohio-based coal company also reported earnings on Aug. 15, but as they are private, it is unclear what the numbers showed.

A trader said he was not sure “what is going on behind the scenes. It could be someone trying to accumulate more [bonds] but there isn’t a lot of supply around.”

Meanwhile, Key Energy Services Inc., a Houston-based oil rig services provider, said late Wednesday that it planned to file a prepackaged bankruptcy plan.

Come Thursday, the 6¾% notes due 2021 were trading down about 3 points to 30½, a trader said. That was up form the day’s low of 29¾.

However, the trader – as well as a few others – remarked that there were no round-lot trades during the day.

Fannie, Freddie rebound, sort of

A couple of Fannie Mae and Freddie Mac’s preferred stock issues continued to be more active than not on Thursday, with the busier securities looking to regain ground.

But one market source noted that “it was only the top three to four issues that were up [for the day]. The majority of the issues were either flat or down a touch.

“But basically, there is no new news,” he added.

Fannie’s 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) recouped most of its losses from Wednesday, finishing up 22 cents, or 5.54%, at $4.19. Freddie’s 8.375% fixed-to-floating rate noncumulative preferreds (OTCBB: FMCKJ) added only 3 cents to close at $3.99.

Recent court rulings have pressured the preferreds. Most recently, the market was reacting to a ruling that said shareholders gave up their rights when the government took the GSEs under conservatorship in 2008.

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