Caesars, NewPage stay busy, firm; Nortel holds ground post-earnings; Hovnanian recovers losses

By Stephanie N. Rotondo

Portland, Ore., Aug. 12 - Distressed bonds were "a little bit better," a trader said Friday.

"The market was hanging in there," said another trader, as the sector traded up with the equity markets.

"It's just that the stock market is doing a little bit better, so there is less pressure," the second trader said.

Caesars Entertainment Corp. and NewPage Corp. continued to be among the most actively traded issues, though there was no news out. Both issues were heading into higher ground Friday.

After releasing its second-quarter earnings Thursday, Nortel Networks Corp.'s bonds were seen hanging around the same levels they had been of late. Trading was also on the thin side, according to a trader.

Among homebuilders, Hovnanian Enterprises Inc.'s debt attempted to recover some of the losses incurred over the volatile week. The company's common stock was also attempting a rally.

Caesars, NewPage end stronger

Recent market mainstays Caesars Entertainment and NewPage continued to be busy in Friday trading, and better, according to traders.

One trader said Caesars' 10% notes due 2018 were up 8 to 10 points from Thursday's open. He saw the notes open Friday at 81, fall back to around 79 and then climb back up to 80½ bid, 81½ offered.

He also said NewPage's 11 3/8% notes due 2014 traded in a range between 80 and 82, "on good size."

Another market source pegged Caesars' 10% notes at 81 bid, which was up 1¾ points on the day.

Nortel steady to better

Nortel Networks' 10¾% notes due 2016 and 10 1/8% notes due 2013 were "better," a trader said, seeing a 108½ bid for paper.

"All I really saw were bids," he remarked. "There wasn't any real volume in it."

Another trader said the debt was "kind of where it has been" around 109.

The Toronto-based bankrupt telecommunications equipment manufacturer reported its second-quarter results Thursday. However, since filing for bankruptcy in January 2009, the company has sold off all of its assets, bringing in $3.2 billion.

Additionally, the company took in $4.5 billion from its patent auction sale to a group led by Apple Inc.

With fewer businesses to bring in funds, revenues dropped to $1 million from $145 million the year before.

"We expect minimal revenues for the remainder of 2011," the company said in a press release.

As of June 30, Nortel had $790 million in cash, versus $775 million as of March 31.

Net loss was $115 million. By comparison, net loss was $1.6 billion in the second quarter of 2010.

Hovnanian recovers

Hovnanian Enterprises' 10 5/8% notes due 2016 got "another solid 2-pointer on the upside," according to a trader.

He said the bonds had closed the previous session around 86 and finished Friday up at 87 bid, 89 offered.

Another market source called the issue up over 3 points at 89 bid.

As the market began selling off at the beginning of the week, the Red Bank, N.J.-based homebuilders stock (NYSE: HOV) started tanking, hitting a low in the low-$1.20s on Tuesday, before coming back to close at $1.43 on Friday.

Broad market firms

Elsewhere in the distressed space, a trader said Lehman Brothers Holdings Inc.'s 6 7/8% notes due 2018 and its 5 5/8% notes due 2013 were up about half a point around the 25 mark.

The trader also saw OPTI Canada Inc.'s 7 7/8% and 8¼% notes due 2014 "up a scrap" around 63.

At another shop, a trader said Chrysler Group LLC's 8% notes due 2019 and 8¼% notes due 2021 - two issues that priced in mid-May - were "way up" at 85 bid.

"That is up a good couple of points," he said.

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