Cemex bonds up as company plans lender meeting; ResCap steadily climbs higher; coal names soft

By Stephanie N. Rotondo

Phoenix, June 26 - It was a "generally light" day in terms of volume for the distressed debt market, according to one trader.

"The market never really got going," he said, pointing to equities that ended the Tuesday session only marginally moved.

Another trader noted that it was nearing month-end, which was possibly causing the muted performance.

Cemex SAB de CV bonds did get a boost, however, after the company said it had scheduled meetings later this week with lenders to discuss a refinancing proposal.

Residential Capital LLC paper was also inching upward, though there was no fresh news to act as catalyst.

The coal arena, however, continued to suffer following the downgrade of James River Coal Co. by Standard & Poor's. There was little to no trading in James River's debt, but Patriot Coal Corp. and Alpha Natural Resources Inc. were sliding in sympathy with their sector peer.

Cemex gets a boost

A trader saw Cemex's bonds up 1 to 2 points on the day, following the announcement that the company had planned meetings with lenders to discuss a refinancing proposal.

The trader called the 9¼% notes due 2020 up a deuce at 851/2, while the 9% notes due 2018 rose a point to 92.

On Friday and Monday, Cemex intends to meet with its lenders to discuss a refinancing plan. The company hopes extend the maturities to February 2017 from February 2014 and revise operational and financial covenants.

The Mexican cement manufacturer also hopes to make a $1 billion in 2013, which would be funded via asset sales.

ResCap on a steady climb

Residential Capital's 6½% notes due 2013 moved up a point to close around 27, according to a trader.

Another trader said the 9 5/% secured notes saw "just a few trades" between 95¾ and 96¾ bid.

He said the restructuring residential lender's bonds were "pretty quiet."

He said, "That's where they've been for the last 4 or 5 days," calling them unchanged within that range.

He said the company's other bonds, like the 6½% notes due 2013 and the 6 7/8% notes due 2015 trade at around a 25-26 level, calling them "maybe a point better today."

There was no fresh news out on the Minneapolis-based bankrupt unit of Ally Financial Inc. However, a bankruptcy judge recently approved a probe of ResCap's pre-filing dealings with its parent, which gave investors a bit of confidence.

Coal remains under pressure

Times continue to be tough for coal names, something that was not helped in the slightest by S&P's downgrade of James River Coal.

The downgrade is the second to occur within three months, based on "sustained decline in the economic viability of thermal coal produced in the Central Appalachia basin" and declining foreign demand.

Though there was not much going on in James River - a convertibles trader opined that investors were weary of the issue already - sector peers Patriot Coal and Alpha Natural were on the softer side.

One market source called Patriot's 8¼% notes due 2018 down as much as 5 points on the day at 31 bid. The source also saw Alpha Natural's 6¼% notes due 2021 down nearly a point at 85 bid.

However, another trader said Patriot's debt was a point higher, also around 31.

In other energy related names, ATP Oil & Gas Corp.'s 11 7/8% notes due 2015 fell a point to 45, a trader reported.

Nokia holding in

Nokia Corp.'s 5 3/8% notes due 2019 "is a name I'm starting to see," a distressed trader said, quoting the troubled Finland-based cellphone manufacturer's bonds at 78 bid, 79 offered on volume of about $25 million to $30 million.

He said those levels were "about where they've been the last couple of days," calling them pretty much unchanged on the day.

However, he said Nokia was "a name that's gotten beat up a little bit in the last couple of weeks," falling from recent highs in mid-80s before the company's June 14 announcement that due to sagging sales, it would have to slice 10,000 jobs from its workforce and close several factories.

Paul Deckelman contributed to this article

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