Distressed bonds trade lower ahead of Fed; AK Steel paper strong as tender offer planned

By Stephanie N. Rotondo

Seattle, June 13 – The distressed debt market started the week off with a softer tone, according to market sources.

“It felt like a lot of things backed up today,” a trader said Monday.

The trader added that activity was muted, as distressed bonds were thrown over in favor of new high-yield issues.

Monday’s subdued trading comes ahead of the Federal Reserve’s policy meeting later this week. The market is waiting to see if the central bank will opt to raise interest rates this month or put the hike off until July or later.

The market is also waiting to see if the United Kingdom will opt to leave the European Union in a referendum vote June 23. Chatter is the so-called “Brexit” is troubling the markets more than the possible rate increase or the looming U.S. presidential election.

As for the day’s dealings, AK Steel Holdings Corp.’s debt was again “pushing higher,” a trader said. The steelmaker announced a tender offer for its 8¾% notes due 2018 on Monday, which will be paid for by a $380 million offering of seven-year secured notes.

Pricing for the new issue is expected on Tuesday.

Meanwhile, names like Chemours Co. and Intelsat SA were “definitely lower,” a trader said.

Chemours’ 7% notes due 2025 were seen falling a point to 81½.

Intelsat’s 8% senior secured notes due 2024 were off about a point as well, trading in a par ½ to 101 context.

© 2015 Prospect News.
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