MF Global bonds head up after 90% of missing cash found; First Data narrows loss, debt rises

By Stephanie N. Rotondo

Portland, Ore., Feb. 1 - Distressed debt was "all better today," a trader said Wednesday.

Still, another trader said the distressed space remained on the quiet side as investors focused on higher-quality credits.

"That's where the money is," he said.

MF Global Holdings Ltd. saw its bonds move up 1 to 2 points on news investigators had found about 90% of missing client funds.

However, locating the missing funds does not guarantee that customers will get their money back, regulators said.

First Data Corp. was also on the rise after releasing its fourth quarter results. Though consolidated revenues were down a touch, net loss shrunk.

MF cash found, bonds firm

MF Global's 6¼% notes due 2014 gained 1 to 2 points on the day as news came out that regulators had uncovered about 90% of missing client funds.

One trader pegged the notes at 351/4, up from 33½ a couple days ago.

Another trader quoted the issue at 35 bid, 36 offered.

It has been estimated that about $1.2 billion of customer funds were missing. Investigators from the Commodity Futures Trading Commission, Securities and Exchange Commission, Justice Department, as well as the company's bankruptcy trustee, have been working to find the cash and to determine what transactions were legitimate.

If transactions are found to be illegitimate, customers could lose out on recovering all of their funds.

MF Global is a New York-based bankrupt futures broker. The firm filed for bankruptcy on Oct. 31.

First Data flies on numbers

First Data debt gained ground after the company announced its fourth-quarter results.

A trader called the 11¼% notes due 2016 up 4 points at 92. He also saw the 9 7/8% notes due 2015 trading near par.

Another market source pegged the 9 7/8% notes at 99½ bid, up 1½ points on the day.

For the quarter ending Dec. 31, the Atlanta-based credit card payment processor reported consolidated revenues of $2.69 billion, a 2% decline year over year. Adjusted revenues, however, were up 3% at $1.73 billion.

Net loss narrowed to $69 million from $179 million the year before.

"The change was largely driven by a $171 million improvement in operating income," the company said in its earnings release.

"We expect increases in both revenue and operating margins this year," wrote Dave Novosel, an analyst with Gimme Credit LLC, n an afternoon note. "Now all the company has to do is make a commitment to whittle down that massive debt."

Broad market gains strength

Elsewhere in the distressed debt realm, ATP Oil & Gas Corp.'s 11 5/8% notes due 2015 fell 3 points to 61, according to a trader.

The trader also saw Caesars Entertainment Corp.'s 10% notes due 2018 gaining a point, closing around 78.

Sears Holdings Corp.'s 6 5/8% notes due 2018 were also better by a point, finishing at 821/2.

Another trader said Lehman Brothers Holdings Inc. paper remained active and stronger.

He pegged the notes at 273/4.

NewPage Corp.'s 11 3/8% notes due 2014 moved up to 66 bid, 66½ offered, he said.

And, Ahern Rentals Inc.'s 9¼% notes due 2013 were "stronger again" at 421/2.

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