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Alpha Natural Resources (ANR) Senior Notes Upgraded to Neutral from Sell at Citi

June 3, 2014 3:15 PM EDT
Get Alerts ANR Hot Sheet
Price: $0.24 --0%

Rating Summary:
    2 Buy, 11 Hold, 8 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 13 | Down: 11 | New: 11
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Citi upgraded Alpha Natural Resources, Inc. (NYSE: ANR) senior notes to Neutral from Sell, and initiating coverage on the 2nd liens with a Buy. While the firm is still cautious on the met coal markets the bonds are down sharply.

Analyst Richard Yu said, "We are changing our recommendation on ANR senior notes to Neutral from Sell. We continue to have a cautious view of met coal markets over the longer term. However, the bonds are down notably since the beginning of this year (2019’s are down to 69 ¾ from 85 ½ when we published our 2014 Outlook piece on January 8th, 2014; 2021’s are down to 67 ¼ from 85 ¼). We think recent met coal capacity cuts should result in higher prices. We believe the higher prices, coupled with ANR’s strong liquidity position, means that the company’s senior notes have limited downside from current levels in the near/medium term. We initiate on the 7.50% 2nd lien notes due 2020 with a Buy (94 ½, 8.66% YTW) as we think they offer attractive value and have sufficient asset coverage. We are changing our Issuer weighting on ANR to Marketweight from Underweight. The ANR senior notes are no longer our top Sell idea for 2014."



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