Murray Energy falls amid Bowie Resource buyout; Sprint bonds rebound after Monday slide; J.C. Penney steadies

By Paul Deckelman

New York, Oct. 31 – Murray Energy Corp. was making news on Tuesday, with the coal company announcing its participation in a syndicate that is essentially buying out sector peer Bowie Resource Partners LLC with the combination of the two companies’ Western bituminous coal assets into a new entity, Canyon Consolidated Resources LLC., to be partially funded by a new junk bond deal.

But Murray’s current bondholders seemed underwhelmed by the news – they took the company’s outstanding bonds down by several points in active trading.

Traders in the bonds of distressed or merely underperforming companies meantime saw two companies whose bonds had fallen on Monday recover, or at least stop the bleeding.

They said that wireless operator Sprint Corp.’s paper was up modestly across the board Tuesday, after having retreated notably on Monday amid talk that negotiations aimed at combining Sprint with competitor T-Mobile (US) Inc. were approaching an impasse.

J.C. Penney Co. Inc.’s bonds were seen little changed on the session, after having fallen for two straight days before that after the struggling retailer released bearish sales and earnings guidance.

Murray paper mauled

Ttraders said that Murray Energy’s 11¼% notes due 2021 “were weaker than usual,” as one put it, seeing the coal operator’s down from their recent levels around 57 or 58 bid, finishing down 2½ points on the day at 54¾ bid.

Another trader also saw them around there and said they were “pretty active,” with over $29 million traded.

He attributed the slide to the Canyon Consolidated news.

St. Clairsville, Ohio-based Murray Energy will be taking about a 30% stake in a new company formed by the leveraged buyout of a sector peer, Louisville, Ky.-based coal operator Bowie Resource Partners.

The two companies’ Western bituminous coal assets will be combined into the new Canyon Consolidated Resources LLC entity, a transaction to be partially funded by a new junk bond deal.

One of the traders, who has watched Murray’s bonds deteriorate with the sagging fortunes of the coal industry – hurt by both environmental regulations and by stiff competition that coal faces from cheaper natural gas –, indicated a degree of astonishment that “they can be acquiring anybody with their own bonds down around 55.”

Sprint snaps back

Elsewhere, a trader said that he had seen “some snap-back” in the bonds of Sprint Corp. and its related entities, which had fallen by around 3 points across the board on Monday in active trading.

They had been hurt by the news that talks between Overland Park, Kans.-based wireless operator Sprint’s corporate parent, the Japanese technology conglomerate SoftBank Group Inc., and Germany’s Deutsche Telekom AG, which controls Bellevue, Wash.- based wireless company T-Mobile, seemed to have reached an impasse.

The two global tech titans have been negotiating on and off for many months about a possible combination of the two U.S. wireless operators, which would form the third-largest American wireless provider, behind Verizon and AT&T.

Despite there being no fresh news Tuesday to contradict Monday’s gloomy assessments about the dwindling chances for a Sprint-T-Mobile merger, a trader saw Sprint’s 6 7/8% notes due 2028 up 3/8 point at 107 3/8 bid, while its 7 5/8% notes due 2025 gained ¾ point, to 111¼ bid.

The 6 7/98% notes were one of the day’s Most Active issues, with over $32 million having changed hands.

Penny paper stabilizes

Another big loser from Monday whose paper was seen to have at least stopped falling by Tuesday was underperforming Plano, Texas-department store operator J.C. Penney.

Its 5.65% notes due 2020 had plunged by more than 5 points in heavy trading on Friday after the company issued pessimistic sales and profit projections for its upcoming earnings report, and they continued to head south on Monday, losing another 2 to 3 points on the day.

But on Tuesday, a trader said that Penney’s issue “was basically unchanged after being lower yesterday,” seeing the bonds finishing around 87¾ bid. A second trader also saw that issue unchanged on the session.

However, he said that Penney’s 5 7/8% notes due 2023 closed down ¾ point on the session, finishing at 94 ¾ bid.

© 2015 Prospect News.
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