Distressed debt sees muted volume, but strength remains; NewPage climbing; Ahern gains ground

By Stephanie N. Rotondo

Portland, Ore., Feb. 18 - A long holiday weekend took some distressed debt players from their desks, resulting in a "pretty dead" Friday market performance, according to a trader.

Still, there continued to be strength in the marketplace, generally speaking.

NewPage Corp. continued to climb on the back of the company's Thursday earnings release. One source opined that as the company had "no negative surprises," investors were more optimistic about the bonds.

Also, Ahern Rentals Inc. remained on an upward course. Market sources have indicated that the bonds might have found their "equilibrium," even as the company missed its coupon payment on Feb. 15.

NewPage gains steam

NewPage notes continued to grind higher after the company released its fourth-quarter and full-year results on Thursday.

A trader called the 10% notes due 2012 a point better around 66, and also saw the 11 3/8% notes due 2014 "just north of par" at par 1/2.

Another market source also pegged the 10% notes at 66 and the 11 3/8% notes "hanging around up at par."

The source said that the company's results held "no negative surprises," giving investors a kind of "no news is good news" feel.

Yet another trader said the 10% notes were the "big-volume winner," with about $30 million traded. He called the notes a point stronger at 66 3/8.

On Thursday, the Miamisburg, Ohio-based coated papermaker posted net sales of $946 million for the fourth quarter, a 10% increase year over year. For the full year, sales came to $3.6 billion, up 16% from 2009. The gains were due, in part, to an increase in printing paper demand in 2010.

"This was a result of a recovery of advertising spending and magazine and catalog circulation during 2010 following a decline in 2009 attributable to weak economic factors and inventory reductions by customers," the company said in its earnings release.

Still, NewPage posted a wider fourth-quarter loss at $240 million, compared with $55 million the year before. Full-year net loss came to $656 million, up from $308 million the previous year.

"The decrease was primarily a result of lower average sales prices, asset impairment charges and lower other income recognized for the alternative fuel mixture tax credits, partially offset by higher core paper sales volume and lower interest expense," the company said.

As of Dec. 31, NewPage had $149 million of liquidity, consisting of $8 million of cash and equivalents and $141 million available under its revolving credit facility.

Ahern ratchets up

Ahern Rentals' 9¼% notes due 2013 remained firm, as sources placed the bonds in the mid-40s.

One such source saw the bonds at 45, while another quoted them at 45 bid, 45½ offered.

The second source called the current trading levels a fair value for the struggling construction equipment rental company. While he was "not super optimistic about the prospect," he noted that some investors believe the industry is poised for a rebound, giving the bonds some upside.

"I think they'll make it; it's a matter of when," he said. "There's no cash flow with things how they are now."

But if the construction arena recovers more, the debt could be attractive, he said.

Ahern Rentals is based in Las Vegas.

Broad market still strong

Also in the distressed realm, a trader said Clear Channel Communications Inc.'s bonds were trending higher, seeing the 10¾% notes due 2016 gaining a point to 991/2.

Another trader saw General Motors Corp.'s 8 3/8% notes due 2033 half a point better at 35¾ bid, 36¾ offered.

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.