Alpha Natural convertibles trade around 3.5 after filing Chapter 11; energy names lower

By Rebecca Melvin

New York, Aug. 3 – Alpha Natural Resources Inc. was the name of the day in U.S. convertibles after the Bristol, Va.-based coal mining company filed to reorganize under Chapter 11 on Monday in the U.S. Bankruptcy Court for the Eastern District of Virginia.

The Alpha Natural 3.25% convertibles, which matured on Friday, had been trading at a little bit of a premium to the company’s other two convertible bonds in anticipation that they would be repaid, but after the filing the paper sank to about the same level of the other two, a New York-based trader said.

All three of the bonds traded at about 3.5, he said. A second source said however that the 3.25% convertibles maintained a slightly higher price of 5.5. But about two weeks ago, those bonds had been about 45.

Elsewhere, Whiting Petroleum Corp.’s convertibles were weaker again with lower oil prices and Chesapeake Energy Corp.’s 2.25% convertibles were quoted at 80.5, which was down another point from Friday’s last price.

On Monday, oil prices slid to six-month lows. Crude oil settled down $1.95, or 4.14%, at $45.17 a barrel. Brent fell below $50 a barrel for the first time since Jan. 30. Oversupply and growth worries continue to weigh on the sector.

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