Springleaf Finance paper takes a downward turn; Edison International halts its run up

By Stephanie N. Rotondo

Portland, Ore., March 20 - The distressed debt arena was fairly mixed in Tuesday trading, though investors continued to focus on new issues.

"Volume was dominated by newer deals," a trader said. "That's all we really trade anymore."

But Springleaf Finance Corp. - the former American International Group Inc. unit known as American General Finance - was seeing its fair share of play Tuesday. The company's debt had recently been climbing higher but reversed course in the second day of the trading week. The weakness came one day after the company said in a regulatory filing that it had paid out interest on hybrid debt due to a mandatory trigger event.

Also taking a breather after a recent climb upward was Edison International Inc. In February, the power company released quarterly results that disappointed investors, who then pushed the bonds down significantly. But once the figures were thoroughly digested, paper began climbing up again - that is, until Tuesday's session.

And, Caesars Entertainment Corp. was one of the day's most actively traded credits. However, it depended upon whom you talked to as to whether the bonds had gained or lost.

Springleaf turns downward

Springleaf Finance's debt gave up some of its recent gains just one day after the company said it had made an interest payment on its hybrid debt securities.

"They had been on a nice tear," a trader said of the debt. He called the 6.9% notes due 2017 down a point at 793/4, with about $10 million changing hands.

"That's a lot for that name," he said.

On Monday, the Evansville, Ind.-based financial services company said that due to a mandatory trigger event, it had made an interest payment on its hybrid debt - that is, debt that is classified as debt but treated more like equity. The mandatory trigger event was that Springleaf's corporate average fixed-charge ratio fell under mandatory requirements set out in the debentures.

Edison run up falters

Edison International's paper "took a little breather," according to a trader.

The Rosemead, Calif.-based company's debt has been on the rise recently, after getting crushed on the back of poor earnings released in late February. But the last few weeks have seen the bonds inching ever higher.

That changed in Tuesday trading, as the 7½% notes due 2013 fell to 84½ from 86 previously, on no fresh news, the trader reported.

Elsewhere in the power arena, Dynegy Holdings LLC's 8¾% notes due 2016 were called unchanged by several sources, all of which saw the bonds trade around the 68 mark.

Caesars trades liquidly

Caesars Entertainment's 10% notes due 2018 were trading busily Tuesday, but traders gave mixed reports as to whether the debt traded higher or lower.

One trader said the notes were a quarter-point softer at 781/2, with about $20 million turning over. Another market source called the issue up a quarter-point, also a 781/2.

A third source said the bonds were "active in the 78-ish range... which was pretty much unchanged."

There was no fresh news out on the Las Vegas-based hotel and casino operator.

Broad market hanging in

Among other distressed credits, a trader said Nebraska Book Co. Inc.'s 10% notes due Dec. 1, 2011 were stronger around 67.

Also firmer were Dex One Corp.'s 12% PIK notes due 2017, he said. He pegged the issue at 301/2.

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