Distressed realm falls quiet in abbreviated pre-holiday session, Sprint volume dwindles

By Paul Deckelman

New York, Dec. 23 - Friday's abbreviated pre-holiday session saw little activity in distressed debt or in the broader junk bond market.

Traders said that activity wound down quickly, with little volume or price change seen in such familiar distressed-market names as Caesars Entertainment Corp., AMR Corp. or Eastman Kodak Co.

Even Sprint Nextel Corp., whose bonds have recently traded around on the news that AT&T had abandoned its spectrum-driven efforts to acquire T-Mobile USA - both compete with Sprint in the wireless communications industry - was seen trading little changed on the day, on not much volume.

Activity winds down

Looking at an early market close ahead of the Christmas holiday - and Monday's full shutdown in the U.S. debt markets - traders noted that there was not much activity, and what there was concluded quickly.

One trader said the session was characterized by "very thin volume," which he estimated to be only about 10% of the norm.

Speaking at around midday, he said that there was "not a lot of action today. Most places have shut down already. Only one of my brokers is left in the Street, while everybody else is gone, and all of my salesmen just left too."

A second, when asked when things began closing down at most shops, quipped "maybe yesterday."

Yet another trader flatly declared that there was "nothing" going on.

Sprint little seen

Traders said that there was not too much activity on Friday in Sprint Nextel, whose bonds had firmed in busy trading earlier in the week on the news of AT&T's abandonment of its effort to acquire T-Mobile USA, a deal which Sprint had opposed.

A trader said that he didn't "see much" going on in the company's bonds. He quoted its 8¾% notes due 2032 at 80½ bid, 80 5/8 offered, which "sounds like exactly where they have been." He saw only one trade all day in the credit.

At another desk, those bonds were seen going out at 81 bid, a half-point gain on the day, with volume of about $2 million.

Another trader quoted Sprint's 6 7/8% notes due 2013 trading at par on Friday, but he said that only $1 million had traded, "so it doesn't mean a whole lot."

At another desk, a market source quoted the Sprint 6% notes due 2016 perhaps a quarter-point better, at 82½ bid, in light trading.

The Overland Park, Kan.-based Number-Three U.S. wireless carrier's bonds had firmed smartly earlier in the week as the company saw its vocal objections to the combination of AT&T and T-Mobile vindicated.

Sprint had vehemently opposed the efforts of Number-Two industry player AT&T to buy T- Mobile, now the Number-Four U.S. wireless firm, in hopes of being able to leapfrog the current industry leader, Verizon Wireless.

Sprint - already far back of both Verizon and AT&T in terms of subscribers and revenues, feared that letting AT&T buy T-Mobile would put it at an even greater competitive disadvantage.

Federal authorities agreed, with both the Justice Department and the Federal Communications Commission filing objections on antitrust grounds that threatened to derail the whole deal, ultimately causing AT&T to pull the plug on the transaction, pay a $4 billion break-up fee to T-Mobile and walk away.

Harrah's little moved

A trader saw little going on in the normally busy 10% notes due 2018 of Las Vegas-based gaming giant Caesars Entertainment Corp., the company perhaps better known as Harrah's.

He quoted that widely held issue at 66 bid, 66½ offered, but on only one trade.

A market source pegged the bonds a half-point higher.

The more active Harrah's issue was its 11¼% notes due 2017, which traded at 106 bid on $4 million of turnover.

AMR bonds grounded

A trader saw little activity in the bonds of AMR, the Fort Worth, Texas-based parent of American Airlines, which recently filed for Chapter 11 protection.

He saw just one trade in its 10½% notes, in a 95-96 context, and no trades at all in its 6¼% notes last seen previously at 22 bid, 24 offered.

The air carrier company's 7½% notes were quoted at 70 bid, 72 offered, also with no trading seen Friday.

Kodak seen unchanged

A trader said that that Eastman Kodak's unsecured 7¾% notes due 2013 were unchanged, quoted in a wide range of 31 to 36 bid.

"I could quote them 31-33, but it doesn't mean anything - there was no real trading," the trader said.

He saw "just a couple of odd-lot transactions."

The Rochester, N.Y.-based photographic products and digital imaging technology company's secured 9¾% notes due 2018 and 10 5/8% notes due 2019 - which earlier in the week had actually moved up a few points to around a 75-76 context, despite the bad news on the trade case -were quoted little changed in a 76-78 context.

Before Friday, the real movement had been in the unsecureds - at the start of the week, those bonds had been in the mid-to-upper 30s, but slid badly after a federal trade disputes referee announced a delay in Kodak's high-stakes patent-infringement claim against Smartphone makers Apple Inc. and Research in Motion Ltd.

The administrative judge overseeing the two-year dispute at the U.S. International Trade Commission - which had been expected to issue a ruling in the case by the end of this month - said that the decision now will not be forthcoming until mid-September of 2012.

The delay puts further pressure on cash-hungry Kodak, which is trying to negotiate a licensing deal for some of its patents that it estimates could be worth up to $1 billion - but which was hoping to have a favorable ruling in the case against Apple and RIM in hand by now to bolster its efforts.

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