Commodities off with broad market; Momentive's descent continues; Clear Channel gets boost

By Stephanie N. Rotondo

Phoenix, Sept. 26 - The high-yield bond market was again soft Wednesday, spurred in part by many empty desks due to Yom Kippur.

"Most people were out for the holiday, which makes a slow day even more painful," said one trader. "Things did seem softer with people out."

The trader also noted the protests in Spain were not helping.

However, another trader said that a few things "got lifted toward the end of the day." Commodities, particularly coal and steel, remained under pressure, as did Momentive Performance Materials Inc.

Clear Channel Communications Inc. was initially down on the day but found itself among those few names that managed to get lifted by the end of the day.

And, RadioShack Corp.'s paper was quoted lower, though activity was muted, as the company announced that its top executive was leaving his post.

Commodities drift

Declines in the broader markets continued to put pressure on commodity names during midweek trading.

One trader deemed AK Steel Corp.'s 8 3/8% notes due 2022 down almost 3 points to 841/2. Another source pegged the 7 5/8% notes due 2020 at 87½ bid, down 1¾ points.

In coal names, Alpha Natural Resources Inc.'s 6% notes due 2019 were off 1½ points to 851/2, according to a trader. A second source placed the 6¼% notes due 2021 at 85 bid, down 1½ points on the day.

Momentive declines continue

The descent of Momentive Performance Materials continued Wednesday, according to traders.

A trader said the 9% notes due 2021 fell 1½ points to 72. Another trader echoed that level.

The chemical maker has been struggling of late due to oversupply of product and a weak global economy. Earlier this month, the company nixed an initial public offering that was expected to bring in as much as $862.5 million.

Clear Channel surges late

Clear Channel Communications' debt benefitted from a late-day surge, a trader reported.

A trader said the 10¾% notes due 2016 hit a low of 69½ before coming back to end around 701/2. The 9% notes due 2021 dropped to as low as 88½ before settling back in an 89-89½ context.

Another trader said the 11% notes due 2016 rose nearly 3 points to 723/4.

With no fresh news out on the San Antonio-based multimedia company, the trader speculated that "maybe [the bonds] are just bouncing off the lows."

RadioShack quiet on CEO exit

RadioShack announced that its chief executive officer, James Gooch, had resigned his post after only 16 months.

Though traders saw little trading in the name post-news, they did see lower markets for the Fort Worth-based electronics retailer's debt.

One trader called the 6¾% notes due 2019 a couple points lower at 63 bid, 64 offered.

Another trader also deemed it down a couple points in that same 63-64 range.

"There was more smoke than fire on this particular name," he said, adding that there is typically more activity in the name than there was on Wednesday.

RadioShack did not give a reason for Gooch's departure. On an interim basis, Dorvin Lively, the chief financial officer, will take over the reins.

"Gooch simply was not effective, and a change clearly needed to be made," Anthony Chukumba, an analyst at BB&T Capital Markets, said in a research note. "We find the timing a bit curious given the fact Gooch was CEO for just over a year and the start of the crucial holiday selling season is less than two months away."

This year alone, RadioShack has seen its equity lose nearly three-quarters of its value. On the news Wednesday, the stock (NYSE: RSH) moved up 4 cents, or 1.56%, to $2.60.

"The problem with this company is they still have like half a billion in cash, so they can exist for awhile," a trader said.

Broad market weakens

In the rest of the markets, a trader said Verso Paper Corp.'s 8¾% notes due 2019 dropped 2½ points to 481/2.

The trader also saw Residential Capital LLC's 6½% notes due 2013 at 27, down a deuce.

At another desk, a trader said NII Capital Corp.'s 7 5/8% notes due 2021 fell almost 4 points to 791/2.

A third trader called Caesars Entertainment Corp.'s 10% notes due 2018 down 1 to 2 points to a 64 to 65 range.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.