Distressed market hangs in despite equity declines; Ply Gem ends steady, worse; Sprint active

By Stephanie N. Rotondo

Portland, Ore., Nov. 29 - The distressed debt market was "a little squishy in the morning because of the equities being lower," a trader reported Monday.

However, he said the market closed "not really lower," even amid light volume for the first "real" trading day since the Thanksgiving holiday.

"Given that the stock market got spanked early, we were kind of sideways," remarked another distressed trader. He added that volume was "light, but maybe not so bad for the first day back."

Still, he noted that most of the investor interest was focused on higher-grade credits.

"Even retailers were on the quiet side as reports trickled in of black Friday activity," another trader said.

Ply Gem Holdings Inc. debt got a little busier than usual, though there was no fresh news out on the company. But traders couldn't agree on how the bonds ended, whether they were steady or softer.

Meanwhile, Sprint Nextel Corp. was dubbed one of the most actively traded credits of the day - and, again, there was no news out to act as catalyst. One market source opined that accounts were trying to raise cash quickly "and this was an easy way to do it," or that perhaps they were covering shorts.

Ply Gem steady to worse

Ply Gem Holdings' debt was "probably off half a point" to "kind of sideways," depending on whom you asked.

One trader saw the 11¾% notes due 2013 slipping to 105¾ bid, 106½ offered, while another saw the bonds holding in, the 11¾% notes around 106½ and the 13 1/8% notes due 2014 at 1053/4.

On Nov. 15, the Cary, N.C.-based manufacturer of residential exterior building products reported an 8.2% decline in its third-quarter sales, a result of the expiration of the federal home buyer tax credit. Sales fell to $269.55 million from $293.47 million the year before.

The lower sales also resulted in a swing to loss from the comparable year-ago period. Net loss came to $6.4 million, versus a profit of $4.4 million in the third quarter of 2009.

But despite what she called the "unsavory results," Gimme Credit LLC analyst Vicki Bryan noted that Ply Gem was faring better than some of its rivals.

"It's better to be closer to the exit of a burning building and window makers like Ply Gem and Associated Materials continue to fare better than most other high yield players which rely more exclusively on new construction," she wrote in a note to clients on Monday.

Still, Bryan said she expected the homebuilding industry to continue to lag in the coming quarters - even going so far as to opine that Ply Gem revenues could drop as much as 7% in the fourth quarter - and that the "muted market outlook" was to blame for Ply Gem's postponed initial public offering, valued somewhere around $300 million.

Sprint active, mixed

Traders said Sprint Nextel notes were among the day's most actively traded, though there was no news out to explain why.

"I'm not sure why it was so active, but there was really nothing else that came close," a trader said.

The trader said the bonds ended "kind of mixed," with a "couple $100 million" turning over. He called the 7 3/8% notes due 2015 half a point softer around 963/4, while the 8 3/8% notes due 2017 were "up a little bit" at 1051/2.

Another trader also deemed the 7 3/8% notes down half a point at 96¾ bid, 97 offered. However, he saw the 8 3/8% notes at 1041/2, which he called unchanged.

"They are rich and liquid," he said of the debt. "There might be some raising cash going on," explaining why the bonds might have been so active.

Investors are still trying to figure out what Sprint will do to keep its Clearwire Corp. partner afloat. The Overland Park, Kan.-based wireless telecommunications provider relies on Clearwire for its 4G network, which was recently expanded to include markets such as Los Angeles. Sprint has said it will do what it can to help out Clearwire, which recently said it was running out of cash - and fast.

Clear Channel dips

A trader said he saw Clear Channel Communications Inc.'s bonds "a lot more today" than he had at the tail-end of last week, adding "but again, I think there were more quotes than trades."

He saw the San Antonio-based media company's 10¾% notes due 2016 at 75½ bid, 76 offered, calling the bonds down half a point, "but on not much activity."

Paul Deckelman contributed to this article

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.