Navios up as contract in ‘full force and effect’; iHeart, Peabody keep moving; retailers trade pre-holiday

By Colin Hanner

Chicago, Dec. 22 – Trading was quiet again in the distressed market on Thursday, the second-to-last session before the Christmas holiday, and activity remained at a near-standstill as it has been most of the week.

“The week has been slow, except where a catalyst drove something,” a trader said.

That’s been the case for iHeartCommunications, Inc., Peabody Energy Corp. and, on Thursday, Navios Maritime Holdings Inc., which saw one of the biggest gains of the day after it was announced that the shipping and logistics company won a ruling from a London-based arbitration tribunal in regards to a construction of an iron ore port.

iHeartCommunications’ notes continued to be one of the most heavily traded distressed securities during the session, likely based off the momentum from the ruling of the America Credit Derivatives Determinations Committee of the International Swaps and Derivatives Association, on Wednesday, a trader said.

And for Peabody, movement was generally upwards after announcing an operating loss on Wednesday. After extending the deadline for filing for a plan of reorganization and related disclosure statement to Thursday, the St. Louis-based coal company announced late Thursday evening it had filed.

“[I’m] waiting to see about their plan,” said a trader.

Several retail companies were “trading before the Christmas holiday,” a trader said, including JCPenney Corp. Inc., Claire’s Stores Inc. and Gymboree Corp.

Several other one-off names traded, though there were no clear impetuses for movement.

Navios wins ruling

Several of Navios’ distressed securities traded up on news that the shipping and logistics company’s contract with Vale International is in “full force and effect” on Wednesday.

Previously, Vale International repudiated a contract with Navios over an iron ore port under construction, and, after Navios received written notice from Vale, Navios began arbitration against the claims.

The 20-year contract in question was ruled by a London arbitration tribunal as “in full force and effect” on Wednesday, a press release said.

A trader said Navios’ 7 3/8% notes due 2022 were up 4¾ points to 61¾, while a market source said the 8 1/8% notes due 2019 went out the door with an 81 handle, up 10¾ points from previous trading levels.

iHeart ‘most active’

Following days of speculation surrounding a ruling from the International Swaps and Derivatives Association, and eventually a decision that ruled a failure to pay credit event occurred in the case of iHeartCommunications, Inc., the media company “continued to be active” on Thursday, a trader said.

In particular, its 14% notes due 2021 were down 2½ points to 39, a trader said, adding they were the most-actively traded distressed securities he had seen during the session.

Another trader said the notes traded “just north of 40” and weakened as the day went on.

On Wednesday, iHeartCommunications also began a private offering of 11¼% priority guaranteed notes due 2021 in exchange for its $347,028,000 of outstanding 10% senior notes due 2018.

Those 10% notes were up ½ point to 74½, a trader said.

The 9% notes due 2021 were unchanged at 73½, a trader said, noting there was only trade that occurred.

Also unchanged were the 10 5/8% notes due 2023, which stayed around a 75¼ handle.

Peabody up ahead of restructuring plan

The better part of the week has seen Peabody Energy Corp. decline amid falling coal prices and an announcement that the company posted an operating loss for November.

On Thursday, its distressed securities were marginally better or unchanged as traders awaited a plan of reorganization from the company.

The deadline for Peabody Energy to file a plan of reorganization and related disclosure statement was Thursday, and the company announced late in the evening that it had filed the plan. The deadline for filing had been pushed back twice.

The 10% notes due 2022 were unchanged at 92¾, a trader said, though he said they had been “creeping up a bit” during intraday trading.

Peabody’s 6½% notes due 2020 were up 1 point to 68, a trader said. A market source agreed with the notes’ movement and the handle.

Retailers trade ahead of holiday

Several retailers have stirred some activity in the distressed arena this week like J. Crew Group Inc. and Neiman Marcus Group Inc. and Thursday saw no shortage.

“A lot of retailers are moving going into Christmas trading,” a trader said.

Children’s retailer Gymboree saw a big move in its 9 1/8% notes due 2018, which were up 2½ points to 46, a trader said.

Claire’s Stores’ 9% notes due 2019 were down ¾ point to 51, a market source said.

And moving up on a single trade were JCPenney’s 6 3/8% notes due 2022, up ¾ point to 36, a trader said.

Healthcare and pharma movers

Valeant Pharmaceuticals International Inc., which has consistently traded throughout the week, saw mixed movement in two of its distressed securities, a trader said.

The 5½% notes due 2023 were down 3/8 point to 73¾ on a “couple of trades,” and the 5 7/8% notes due 2023 were up 1/8 point to 74½.

Concordia International Corp. saw one trade in its 9½% notes due 2022, which were up ¾ point to 36, a trader said.

And hospital operator Community Health Systems Inc.’s 8% notes due 2019 were down ¼ point to 82.

One-off roundup

Stone Energy Corp., which filed for Chapter 11 bankruptcy protection last week, continued to climb on Thursday.

Its 7½% notes due 2022 were up 1¾ points to 61, a market source said.

Satellite service provider Intelsat Jackson Holdings SA’s 5½% notes due 2023 were down ¼ point to 67¾, a trader said.

A market source said the similarly held 7¼% notes due 2019 were up ¼ point to 84¼.

Iron ore miner Cliffs Natural Resources Inc.’s 6¼% notes due 2040 were up ½ point to 80½.

And pulp and paper company Resolute Forest Products Inc.’s 5 7/8% notes due 2023 were up 2 points to 86¼, a market source said.

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