Navistar International Corp. (NAV) bonds dropped to the lowest price since they were issued after a U.S. appeals court ruled it can no longer sell engines that don’t comply with environmental standards.

Navistar’s $900 million of 8.25 percent notes due November 2021 dropped 5 cents to 93 cents on the dollar at 2:53 p.m. in New York, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The bonds fell as low as 89.9 cents, the lowest price since the third-biggest U.S. and Canadian maker of truck engines sold them in 2009. Yields on the bonds, the most active in the speculative-grade market today with 65 trades, climbed to 9.4 percent from 8.56 percent.

The U.S. Court of Appeals in Washington threw out an interim rule by the Environmental Protection Agency that allowed Navistar to sell non-compliant engines if it paid a fine. The court found that the U.S. agency had violated the Administrative Procedures Act in issuing the rule because it provided no formal notice or opportunity for comment.

Standard & Poor’s last week downgraded Navistar to B+, four levels below investment grade, and said it may cut the company’s ratings further after talking with management about its strategy. Fitch Ratings put Navistar’s BB rating on “watch negative” on June 8.

Navistar lowered its annual profit forecast last week to a range of break-even to $2 a share as it copes with the repercussions of pursuing an emissions-reduction technology that has prevented it from winning EPA certification for its 13-liter engine.

To contact the reporter on this story: Zeke Faux in New York at zfaux@bloomberg.net

To contact the editor responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net.