Distressed debt market ‘basically shut down’ for week; Peabody, Avaya inch higher

By Stephanie N. Rotondo

Seattle, Sept. 1 – Weakness crept into the distressed debt market on Thursday as the new month began.

However, one trader opined that overall volume was limited and that it was therefore difficult to say if the space was actually weaker.

“It feels like [the market] has basically shut down until Tuesday,” he said.

The markets will be closed Monday in observance of Labor Day.

While the overall tone of the day was softer, there were a few names that managed to buck the trend.

Peabody Energy Corp., for instance, continued to inch upward. A trader said the 10% notes due 2022 were “up another half a point” at 34½.

“They continue to trade well,” he said.

Another market source deemed the 6½% notes due 2020 a point better at 22½ bid.

Avaya Inc. was another name that was gaining ground, albeit modestly so. A trader saw the 9% notes due 2019 tick up half a point to around 77.

The trader noted that there was some news out on the company regarding its intention to stay current on its debt obligations.

Back in June, the Santa Clara, Calif.-based telecommunications technology company began talking with bondholders on ways to reduce its $6 billion debtload.

The oil and gas arena was meantime weaker for the day, due in large part to yet another decline in oil prices.

Domestic crude dropped 2.65% in Thursday trading, ending at $44.10 a barrel.

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