Distressed market mixed as investors digest FOMC; Cliffs up despite earnings miss

By Paul Deckelman

New York, April 29 – Traders said there was no clear theme in Wednesday’s distressed market.

They noted the fact that investors in the broader high-yield arena were trying to gauge the impact of the Federal Reserve’s policy-setting Federal Open Market Committee communique, in which the central bank took a dimmer view of the United States labor market and economy; observers said that policy statement suggested the central bank may have to delay a planned interest-rate rise until at least the third quarter, rather than around mid-year.

Among specific credits, the traders said that Cliffs Natural Resources Inc.’s bonds pretty much held in – even though the coal and iron company’s first-quarter results turned out to be a disappointment, causing its shares to slide. The bond investors were said to have focused instead on the good news about an asset sale.

A fall in iron ore prices, meantime, pushed Cliffs sector peer Fortescue Metals Group Ltd.’s new and established bonds lower.

But the sharp slide seen Tuesday in metals name Magnetation LLC’s notes seemed to have run its course by Wednesday.

Oil names like Linn Energy LLC and Energy XXI Ltd. were seen better.

Coal operator Peabody Energy Corp.’s bonds were softer.

In the convertibles market, IGI Laboratories Inc. paper dropped after the pharmaceuticals company’s earnings missed estimates – but those converts were in line on swap.

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