Secondary space roars back to close out week; energy, coal see decent rally; AMD profit misses

By Stephanie N. Rotondo

Phoenix, Oct. 17 – The distressed debt market had “a major rebound today,” a trader said Friday.

“It was a raging bull market today,” the trader said.

But another source noted that “the market was very thin and trades took place wherever a seller would let bonds go.”

The market had suffered throughout the week as the broader markets swung wildly. In the bond market specifically, the coal and energy sectors took massive hits.

But those names came back in Friday trading.

“Some of the coals were up 5 points, some of the energy names were up 5 points,” a trader said.

Meanwhile, Advanced Micro Devices Inc. was mostly higher on the day, despite reporting earnings that missed expectations.

Energy and coal recover

Energy and coal names – which had bore the brunt of the week’s beat-down – came roaring back on Friday.

Halcon Resources Corp.’s 8 7/8% notes due 2020 popped 6 points to 91, while the 9¾% notes due 2020 gained 5¾ points to 92¾.

Linn Energy LLC’s 6¾% notes due 2020 also jumped 5 points to 98, a trader said. Another market source deemed the company’s 7¾% notes due 2021 up 4 points at par.

SandRidge Energy Inc.’s 7½% notes due 2021 were seen finishing up 4½ points to 93½.

And, Samson Investments Co.’s 9¾% notes due 2020 put on nearly 4 points to close at 83¾.

In offshore drilling names, Hercules Offshore Inc. saw a major move upward.

A trader said the 6¾% notes due 2022 closed up over 9 points at 66 and the 7½% notes due 2021 finished up 10 points higher at 70.

Ocean Rig UDW Inc.’s 6½% notes due 2017 were meantime almost 4 points better at 93.

In the mining space, Cliffs Natural Resources Inc.’s 4.8% notes due 2020 ended the day up 6 cents at 71, while Quicksilver Resources Inc.’s 11% notes due 2021 improved 3½ points to 58.

Among coal names, Arch Coal Inc.’s 7¼% notes due 2020 were seen increasing a whopping 12¼ points to 52¾. The 8% notes due 2019 gained 6 points to end around 71.

Alpha Natural Resources Corp.’s bonds finished up 5 to 6 points, a trader said, seeing the 6¼% notes due 2021 up 6 cents at 53 and the 7½% notes due 2020 up “5 and change” point to 85¼.

At another desk, a market source called the 6¼% notes up 4½ points at 52½ bid.

AMD earnings miss

Advanced Micro Devices released its quarterly results late Thursday and come Friday, the company’s debt was trading mixed.

One trader said the 7% notes due 2024 were up 3½ points at 88½. Another source pegged the 7¾% notes due 2020 at 92¾ – down a quarter-point – and the 7½% notes due 2022 at 90½, up half a point.

The market was already concerned about the chipmaker’s earnings results when it suddenly switched chief executive officers the week before.

Lisa Su took over for Rory Read on Oct. 8.

For the third quarter, AMD’s results missed expectations. The company reported earnings per share of 3 cents on revenue of $1.43 billion. While revenue was up year over year, it still missed predictions of earnings of 4 cents per share on revenue of $1,473,000,000.

Looking to the fourth quarter, the company is projecting revenue between $1.2 billion and $1.29 billion – though analysts’ average estimates were $1.48 billion.

Fannie, Freddie gain

Fannie Mae and Freddie Mac preferreds were moving up as it was reported that the Federal Housing Finance Agency plans to release a plan to ease lending standards for those with less-than-perfect credit scores.

Lenders have been hesitant to open those doors because they did not have a clear indication of when they might have to repurchase mortgages that go bad.

The announcement is expected to come at the annual Mortgage Bankers Association’s meeting in Las Vegas on Monday.

Freddie’s fixed-to-floating rate noncumulative perpetual preferreds (OTCBB: FMCKJ) rose a dime, or 2.74%, to $3.75. Fannie’s 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) ended up 5 cents, or 1.36%, to $3.73.

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