Realogy bonds close session mixed; MF Global plummets on poor earnings release; Caesars active

By Stephanie N. Rotondo

Portland, Ore., Oct. 25 - Distressed debt ended Tuesday's session mixed as the equity markets declined, traders reported.

"Stocks were off a bit so buyers took a pause," a trader said.

"We were strong in the morning and then it tailed off at the end of the day," said another trader.

Realogy Corp. typified the day's performance, as its bonds closed mixed. There was no news out, but the company is expected to report earnings next week.

Meanwhile, a trader said MF Global Holdings Ltd. was "an interesting one." The futures broker's rating was cut on Monday to the lowest investment-grade level, but poor earnings out on Tuesday sent the company's debt into a downward spiral.

The most actively traded security of the day was Caesars Entertainment Corp.'s 10% notes due 2018. The bonds closed unchanged to lower, depending upon whom you asked.

Realogy bonds mixed

A trader said Realogy's 11½% notes due 2017 were active and up by almost 2 points on the day.

He placed the notes around the 76 level.

Another trader quoted the issue at 74 bid, 76 offered.

At another desk, a trader saw the 7 7/8% notes due 2019 falling to 86 bid, 87 offered.

He noted that the paper had traded up a few points in the previous session.

Realogy, a Parsippany, N.J.-based provider of real estate and relocation services, will report its third-quarter results on Nov. 1.

MF Global dives on numbers

MF Global Holdings on Tuesday reported its largest-ever quarterly loss, which resulted in massive declines for the New York-based firm's bonds.

"The stock got shellacked," a trader said. The 6¼% notes due 2016 had been in the 80s, but fell into the mid-60s, according to the trader.

Another market source deemed the notes down about 20 points, closing around 63.

The issue priced Aug. 8.

MF Global reported a net loss of $191.6 million, or $1.16 per share, for the third quarter. That compared with a loss of $94.3 million, or $0.59 per share, the year before.

Revenues dropped 14.3% to $205.9 million.

The poor results followed a rating downgrade from Moody's Investors Service on Monday. Moody's dropped its long-term rating to Baa3 from Baa2, alleging that the firm was not properly managing risk.

"If market volatility stays elevated, we question how the firm is going to achieve the earnings necessary to avoid a downgrade of its debt to junk status, which in turn could materially impact its ability to act as a counterparty as well as raise MF's cost of debt," Patrick O'Shaughnessy, an analyst at Raymond James & Associates in Chicago, said in a note to clients.

Elsewhere in the financial realm, a trader said PMI Group Inc.'s 6% notes due 2016 were "very quiet," trading around 26. Sector peer Radian Group Inc. meantime saw its 5 3/8% notes due 2015 slipping 6 points to end around 60.

Another trader said Lehman Brothers Holdings Inc.'s benchmark issues continued to trade strong around the 25 mark.

Caesars trades actively

Caesars Entertainment's 10% notes due 2018 were once again the dominating issue of the day, according to traders.

One trader said the debt was "basically unchanged" at 74 1/2. Another called the paper "down a little bit," trading with a 74 handle versus levels around 75 on Monday.

Caesars is a Las Vegas-based casino operator.

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