Murray Energy paper pops on DoE rule proposal; Fresh Market eyed post-earnings; Petsmart slips

By Stephanie N. Rotondo

Seattle, Sept. 29 – With several different distressed debt issuers in the news on Friday, the market was actually getting some attention in the month- and quarter-end session.

Murray Energy Corp. was notable on Friday as the Department of Energy proposed a new rule that “could be beneficial” to coal mining companies. Word of the proposal sent Murray’s bonds up 3 points or more on the day.

Meanwhile, Fresh Market Inc.’s debt remained active. A trader noted that the privately-held company released earnings earlier in the week, which had caused the bonds to decline.

One trader said the debt attempted to recover in Friday trading, though he added that the notes eventually finished unchanged.

Elsewhere in the world of distressed retailers, a trader said Petsmart Inc.’s debt was declining yet again.

He saw the 8 7/8% notes due 2025 slipping almost a point to 79¾, while the 5 7/8% notes due 2025 fell 1¼ points to 87¼.

Murray, FirstEnergy power up

Murray Energy’s 11¼% notes due 2021 got a boost on Friday after the Department of Energy released a proposal aimed at preventing additional premature closures of certain power generating facilities.

“Basically it’s a proposal that would be good for coal generating plants,” a trader said.

He called the bonds “very active” in the wake of the news, seeing the paper rising “over 3 points” to trade “around 60.”

The trader also noted that FirstEnergy Corp.’s 6.05% notes due 2021 were “up a bunch,” trading “in a wide range” in the low- to mid-40s.

FirstEnergy is a power producer that happens to be one of Murray Energy’s largest customers.

At another desk, a trader deemed Murray’s debt up 3¼ points at 60.

Murray Energy is a St. Clairsville, Ohio-based coal mining company.

Fresh Market flat

Fresh Market’s 9¾% notes due 2023 “had a big bounce back,” a trader said Friday.

However, while the bonds were trading up intraday, they closed flat at 60½, the trader said.

Another trader pegged the notes at around 61.

“They had poor earnings a couple days ago,” the trader said, adding that the company is private and therefore the results are not available to the public.

S&P reacted to the recent results on Friday by lowering the grocer’s corporate credit rating to CCC- from B-.

The senior notes were also lowered to CCC- from B-.

The ratings agency said its action were due to the weak operating results, as well as the bonds’ low trading prices, which increases the probability of a distressed exchange.

More moves in Fannie, Freddie

Fannie Mae and Freddie Mac preferreds continued to see active trading on Friday, despite any real news to act as a catalyst.

What was notable, however, was that issues that don’t trade that often were actually topping the charts.

Fannie’s variable rate series P noncumulative preferreds (OTCBB: FNMAH) were the most actively traded securities of the day, with about 1.89 million of the preferreds being exchanged.

The issue closed unchanged at $5.50.

Also unchanged were Fannie’s variable rate series O noncumulative preferreds (OTCBB: FNMFN), which finished at $10.90.

About 1 million of those preferreds were traded.

As for the usual go-go GSE issues, Fannie’s 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) rose 7 cents, or 1.01%, to $6.97, while Freddie’s 8.375% fixed-to-floating rate noncumulative preferreds (OTCBB: FMCKJ) added a dime, or 1.49%, to close at $6.83.

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