Consol, Peabody bonds decline post-earnings; Arch Coal cancels debt swap; AK Steel surprises

By Stephanie N. Rotondo

Seattle, Oct. 27 – The distressed debt market was focused on a round of earnings on Tuesday, specifically in the commodity space.

In the coal sector, Consol Energy Inc. and Peabody Energy Corp. released their third-quarter results. Bonds – and stocks – weakened in response, though Consol swung to a profit and Peabody’s numbers beat expectations.

A trader said Consol Energy’s 5 7/8% notes due 2022 contracted by 3 points after the company reported earnings on Tuesday.

The trader pegged the issue at 68.

Fellow coal producer Peabody also came out with earnings on Tuesday.

On the heels of the release, a trader said the bonds were “a little bit weaker,” seeing the 10% second-lien notes due 2022 fall “as much as 2 to 3 points” to 37½.

A second market source placed the 6½% notes due 2020 at 21 bid, down over a point.

Also in the coal arena, Arch Coal Inc. nixed an exchange offer for three series of notes after the company failed to secure lender approval on the deal. Those bonds also ended down on the day.

Among U.S. steelmakers, AK Steel Holding Corp. put out its latest financial report, which showed a surprise profit. However, the company also announced that its chief executive officer, James L. Wainscott, will retire at the beginning of the year.

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