First Data, AIG still firm; Claire's up on improved numbers; Lyondell steady, Tronox notes dip

By Stephanie N. Rotondo

Portland, Ore., May 27 - The distressed debt market was firm again on Thursday, up half a point to 1½ points across the board, according to one trader.

"Some stuff was short covering, so it was higher," he said.

Still, another trader noted that while volume was good - he said total secondary trading hit "just about $2 billion - it was spread out over a wider variety than was seen on Wednesday, and a lot of it "was just onesies and twosies."

Financials continued to be on the active side. First Data Corp. remained on an upward track, gaining another couple of points. American International Group Inc. was also better, by about 3 points, a trader said.

Improved first-quarter figures helped to give Claire's Stores Inc.'s debt - both corporate and bank - a boost. However, market sources noted that trading in the bonds was thin.

In the chemical manufacturing space, Lyondell Chemical Co. saw its bonds holding steady, even as fellow chemical maker Tronox Worldwide Inc. dipped.

With month-end and a holiday approaching, market players are speculating that Friday trading will be light, as many will be absent from their desks to get a head start on the three-day weekend.

The market will be closed Monday in honor of Memorial Day.

First Data, AIG still firm

Financials continued to be firm as the market itself headed upward.

A trader said First Data's 9 7/8% notes due 2015 continued to move higher, pegging the paper 2 points better at 811/2. Another trader also placed the notes around that level, seeing about "$25-odd million" change hands.

The Atlanta-based electronic payment processor saw its bonds start the week on the downside, as the company announced the departure of some of its management team, including its chief financial officer.

"Since then, all they've done is slowly bring it back up," a trader noted.

Meanwhile, American International Group's 8.175% notes due 2058 "rallied again," a trader said.

The trader called the bonds up 3 points at 76 bid, 77 offered.

The AIG notes had started to climb on Wednesday, as the company's top executive testified before the Congressional Oversight Committee, which is overseeing the funds doled out during the economic crisis. But according to the trader, it was not the executive's comments regarding paying back taxpayers, but a hedge fund manager's remarks during the Ira Sohn Conference.

According to news reports, David Tepper of Appaloosa Management was touting AIG - specifically the 8.175% notes - at the conference. Tepper claimed that the bonds were underpriced, which he attributed to a misunderstanding of the New York-based insurance company's capital structure.

Claire's up on improved numbers

Claire's Stores released its first-quarter results on Thursday, giving the company's capital structure a bit of a boost.

However, a trader said activity in the bonds was minimal, seeing the 9 5/8% notes due 2015 "up a little bit" around 85.

Claire's term loan B was also stronger following the company's quarterly report, which showed improvements on a year-over-year basis, according to traders.

The term loan B was quoted by one trader at 84 bid, 85 offered, up from 82 bid, 83 offered, and by a second trader at 84¼ bid, 84½ offered, up from 83½ bid, 84 offered.

For the quarter, the company reported a net loss of $12.3 million, compared with a net loss of $29 million in the previous year.

Net sales for the quarter were $322.1 million, up 9.9% from $293.1 million in the fiscal 2009 first quarter.

And, adjusted EBITDA for the quarter was $49.2 million, compared with $36.3 million in the prior year.

"Our first quarter results demonstrate continued improvement despite a volatile global economy," said Gene Kahn, chief executive officer, in the earnings release. "We acknowledge the contribution of our worldwide team for their steadfast commitment to our business objectives which helped produce this relatively strong performance."

As of May 1, the Pembroke Pines, Fla.-based company had cash and equivalents of $220 million. About $194 million was available under its revolving credit facility.

Also, during the first quarter the company paid $16.8 million to retire $6 million of its senior toggle notes and $15.6 million of its senior subordinated notes.

Lyondell steady, Tronox dips

Chemical manufacturers were mixed on the day, as traders saw Lyondell Chemical's debt holding its ground while Tronox Worldwide's bonds slipped.

A trader said about $10 million to $12 million of Lyondell's 11% notes due 2018 traded. However, he said there "wasn't much price movement," placing the bonds at 105½ bid, 106 offered.

At another desk, a trader called Tronox's 9½% notes due 2012 "a few points lower" at 17 bid, 18 offered.

There was no fresh news out on either company.

Trident loan making strides

Trident Resources Corp.'s $410 million four-year term loan is "going well" with the book described as being "in good shape" ahead of the upcoming Wednesday commitment deadline, according to a market source.

The term loan, which launched with a bank meeting on May 19, is being talked at Libor plus 950 bps with a 3% Libor floor and an original issue discount of 97.

The loan is non-callable for one year, then at 105 in year two, 104 in year three and 103 in year four.

Credit Suisse is the lead bank on the deal.

Proceeds from Trident Resources' term loan will be used to help fund its emergence from Chapter 11.

The company has already received court approval of the disclosure statement for its plan of reorganization, and the plan confirmation hearing is scheduled for June 15.

As part of the reorganization plan, the company is looking to do a $200 million equity rights offering and holders of 2006 credit agreement claims and 2007 credit agreement claims will be entitled to purchase that stock.

Trident is a Calgary, Alta.-based natural gas production company.

Clear Channel up from lows

A trader said Clear Channel Communications Inc.'s 10¾% notes due 2016 "continued to be active." He added that the debt had "rallied from the bottom," closing 2 to 3 points higher around 73.

In a recent research note from CreditSights, analysts said that Clear Channel should be stable in the near term, but that it faces another big hurdle in 2013.

In 2013, Clear Channel will have to make a special payment to prevent losing certain tax deductions. And, though it has just enough cash to get through 2013 - the company last reported having $1.4 billion in cash - it will likely need more funds to continue through to 2014.

Clear Channel is a San Antonio-based multimedia company.

Distressed market mostly better

Elsewhere in the world of distressed debt, a trader called Energy Future Holdings Corp.'s 11¼% notes due 2017 "up a couple points" around 64. He added that "probably $50 million, maybe more" of the notes turned over.

Another trader said Harrah's Entertainment Inc.'s 10% notes due 2018 improved over a point, ending around 79.

Sara Rosenberg contributed to this article

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