Mississippi Power Co. (NYSE: MP-D) is under review for a credit downgrade as a result of an ongoing investigation of continued delays and cost overruns for its coal gasification plant in Kemper County. The energy company last experienced a downgrade of its debt in November 2015, which brought its Moody's rating down to near junk status of Baa3. If the review goes poorly for the plant, Mississippi Power Co. will be in danger of crossing over into non-investment grade status.
This past Friday, Avaya Inc., announced that it had filed for Chapter 11 bankruptcy protection in attempt to reduce its load of $6.3 billion in debt. The telecommunications company has been burdened by debt since an $8.2 billion buyout in 2007 by private equity companies, Silver Lake Partners and TPG Capital. Looking at intraday broker loan quotes on Avaya's L+525 2020, today's market opened at a 83 7/8 bid and 84 5/8 offer. Since then, the market has trended down to most recently a 83 1/2 bid and 84 offer. The L+750 DIP remains constant at 102 3/4 and 103 1/2.
AMAG Pharmaceuticals (NASDAQ:AMAG) saw a sharp drop in its debt in the past week following the release of its actual results in sales. Although the pharma company saw its sales rise to a new record in this past year, investors are concerned as its top-selling drug, Makena, is set to lose its patent exclusivity in 2018. The maternal drug aid currently makes up 70% of AMAG's sales and with no defense to differentiate it from generics, investors are uncertain of how the company will be able to cope.
Abbot Laboratories (NYSE:ABT) saw a series of bond issues downgraded this past week from A2 to Baa3. This rating downgrade follows the aquisition of St Jude Medical Inc. (NYSE:STJ) on January 4th and the concerns that Abbott will struggle with deleveraging in the future. Since the acquisition and downgrade, ADI's CDS screener has shown Abbott Laboratories 5Y Sen USD XR14 CDS (green) drop and then widen to 62 Basis Points. Over the same period, ABT's equity (grey) had been on the rise until a drop yesterday.
Xerox Corp. (NYSE: XRX) saw a jump in its bonds following the successful split of its business services arm, Conduent Inc. (NYSE: CNDT). The announcement came yesterday as the new Xerox CEO, Jeff Jacobson, announced that, "The successful completion of the separation sharpens our market focus and commitment to our customers". In addition to the ability to resharpen the focus of Xerox to its bread and butter of the technology and hardware business, it also received a $1.8 billion cash transfer from Conduent to help pay off around $2 billion of outstanding debt.