Distressed debt sees slow recovery; iHeart follows downward trend; Energy XXI bonds pressured

By Stephanie N. Rotondo

Phoenix, Aug. 12 – There was “some more volatility in the market” on Wednesday, a distressed debt trader said.

“There was a pretty good rebound in stocks, but a lot of the things I saw didn’t recover,” the trader added.

The equity markets were rebounding a bit as oil prices experienced a rally. However, the day started with a weak tone on continued concerns about China after it devalued its currency on Tuesday.

But in distressed bonds, signs of weakness remained. iHeartMedia Inc. paper, for instance, was down a few points “just because the market has been getting” battered, according to one trader.

He said the 14% notes due 2021 were “pretty active,” trading in a 60 to 60½ context. He called that down “3 to 4 points over the past couple of days.”

At another desk, that issue was deemed a point lower at 60½ on “almost 20 trades.”

As for the San Antonio-based multimedia company’s other issues, the second trader called the 10% notes due 2018 down 2½ points at 75 5/8, while the 11¼% notes due 2021 dropped a like amount to 90½.

He saw the 9% notes due 2021 ending unchanged at 85½.

Elsewhere, Energy XXI Ltd. bonds were getting beat up despite the modest gains in oil prices.

“I think there was a specific issue there,” a trader said. Two market sources reported that they saw headlines that indicated the Houston-based oil and gas producer was struggling to get a debt deal done.

There were some names, however, that were finishing with a positive tone.

Hexion Inc. was one such name, as its bonds gained at least a point on the heels of the company’s earnings announcement.

Energy XXI drops

A trader said Energy XXI paper was down on the day, “just with the market being soft.”

However, he noted that he had also seen reports that indicated the company was “struggling to craft a debt swap with bondholders.”

He placed the 11% notes due 2020 around 61.

Another trader also pegged the paper at 61, calling the level off nearly 3 points. He also saw the 8¼% notes due 2018 at 39¼, a loss of 4½ points.

Hexion narrows loss

Hexion, a Columbus, Ohio-based thermoset resin producer, released its second quarter results on Wednesday.

One trader said the 8 7/8% notes due 2018 “rebounded a little bit” to 84 from 82 in “active” trading. He then deemed the 6 5/8% notes due 2020 up a point at 90½ bid, 91 offered.

The 9% second-lien notes due 2020 were pegged around 67.

A second trader called the 8 7/8% notes up 1½ points at 84¼. The 6 5/8% notes were similarly higher at 90¾, the trader said.

For the quarter, net sales fell to about $1.09 billion from $1.34 billion. Net loss meantime narrowed to $2 million from $22 million the year before.

The sales decline was attributed in large part to a strong dollar.

As of June 30, Hexion had $4 billion in total debt, up from $3.8 billion at the end of the December. Liquidity was $634 million, including $308 million of unrestricted cash and equivalents, $2 million in short-term investments, $290 million available under an asset-backed loan facility and another $34 million from time drafts and availability under credit facilities at certain international units.

Getty slips

Getty Images Inc. term loan softened as talk surfaced that the company is looking to raise additional debt, a trader said.

The term loan was quoted by one trader at 65 bid, 67 offered in the afternoon, and had traded as low as 62 bid, 65 offered during the session, versus levels on Tuesday of 68 bid, 70 offered. A second trader was quoting the term loan at 64 bid, 67 offered, down from 68¾ bid, 69¾ offered.

The company’s 7% notes due 2020 were also “down a few points,” a trader said.

He said the issue was active, trading around 37.

Getty Images is a Seattle-based creator and distributor of still imagery, video and multimedia products.

Sara Rosenberg contributed to this article

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