China worries result in weaker markets; coal names drifting in; Homex family sells more shares

By Stephanie N. Rotondo

Phoenix, June 24 - Concerns about China's financial stability caused a rout in the stock markets on Monday, which in turn put pressure on the distressed debt space.

"Everything was down," a trader said. "All that low-coupon stuff was getting hit."

Another trader opined that most names were down 2 to 3 points on average.

The China fears also put pressure on commodities, which then pressured the already-stressed coal sector.

A trader saw Alpha Natural Resources Inc.'s 6% notes due 2019 falling to 79 bid, 80 offered, versus previous levels around 83.

"Coal has been an underperforming sector, no question," a trader said.

Exide Technologies Inc. managed to hold in, though the bonds were down slightly.

One trader saw the 8 5/8% notes due 2018 slipping half a point to 601/2. Another trader also pegged the debt at that level.

Edison Mission Energy paper was not as lucky, losing 2 to 3 points across the board, according to a trader.

The trader placed the bonds - which tend to trade on top of one another - at 56¾ bid, 57 offered.

And, a trader said Clear Channel Communications Inc.'s LBO debt - the 10¾% and 11% notes due 2016 - "gave back a few more points," ending in an 84 to 85 context.

In emerging market names, Petroleos de Venezuela SA's 8½% notes due 2017 - the most active issue in all of the high-yield space on Monday - dropped a point to 863/4, while OGX Petroleo & Gas Participacoes SA's 8½% notes due 2018 declined nearly 2½ points to 28.

Desarrolladora Homex SAB de CV's 9¾% notes due 2020 meantime fell just over a point in thin trading, despite news the company's founding family had sold more of its stake during the month of June.

A trader called the notes off 1 1/8 points at 373/4.

In a regulatory filing on Monday, the company reported that the De Nicolas family had sold another 1.19 million of its shares in June in order to meet margin calls on loans that were made in the period between 2008-2010. The family has sold nearly 40% of its stake since April.

The most recent sale dropped the family's holdings to 17.09% from 17.44%.

In May, Homex hired JPMorgan to act as a financial advisor as the company looks to restructure itself.

© 2015 Prospect News.
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