Murray Energy bonds remain in play, better; Windstream rise starts to slow; GSE paper gains

By Stephanie N. Rotondo

Seattle, Oct. 3 – Recently topical distressed debt names continued to be in focus in Tuesday trading.

Murray Energy Corp.’s 11¼% notes due 2021 were “pretty active,” though perhaps less so than the last couple of sessions, a trader said.

The bonds also continued to gain ground, rising “almost a point” to 62¾.

Another trader said the debt “traded up again” to 63.

On Friday, Murray became topical after the DoE released a proposal aimed at preventing additional premature closures of certain power generating facilities – such as what happened to FirstEnergy Corp. earlier this year.

While Murray is not itself a power producer, it is a coal mining company, FirstEnergy happens to be one of its biggest customers.

Meanwhile, Windstream Holdings Inc. – another name that has been rather busy of late – was unchanged to better on the day.

At one shop, a trader said the 7¾% notes due 2021 were steady at 75½. Another market source pegged the 6 3/8% notes due 2023 at 75½ as well, up a point.

Last week, Windstream was slapped with a default notice from Aurelius Capital, a holder of more than 25% of the 6 3/8% notes. Aurelius alleged that a transfer of assets, as well as other activities surrounding the spin-off of what would become Uniti Group, was a violation of the indenture, or a default.

However, the company is denying that a default occurred. The company even went so far as to seek an injunction on the bondholder, asking a judge to deem the asset transfer and related activities legitimate.

CreditSights believes that Windstream will come out on top with its “simple and straightforward approach to counter default claims tied to what it sees as the clear and unambiguous language of the contract.”

Freddie, Fannie gain ground

GSE-linked preferreds continued to trade actively on Tuesday, as the market waited to see what Mel Watt, head of the Federal Housing Finance Agency, would say before the House Financial Services Committee.

Freddie Mac’s 8.375% fixed-to-floating rate noncumulative preferreds (OTCBB: FMCKJ) were up a dime, or 1.45%, at $6.83. Fannie Mae’s 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) were up 9 cents, or 1.3%, at $6.99.

Fannie’s variable rate series P noncumulative preferreds (OTCBB: FNMAH) closed up 4 cents at $5.58.

As was expected, Watt once again reiterated that the mortgage guarantors need to be allowed to build up a capital buffer. Fannie and Freddie are currently allowed to have a very small capital cushion, though that number is set to hit zero come 2018.

Furthermore, Watt urged Congress to take action on housing reform sooner than later.

“Like any business, the enterprises need some kind of buffer to shield against short-term operating losses,” Watt said in his testimony. “In fact, it is especially irresponsible for the enterprises not to have such a limited buffer because a loss in any quarter would result in an additional draw of taxpayer support and reduce the fixed dollar commitment the Treasury Department has made to support the enterprises.”

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.