Lehman Brothers exits bankruptcy, bonds finish strong; MF Global paper better; Hovnanian slips

By Stephanie N. Rotondo

Portland, Ore., March 6 - The distressed debt market was "very soft and heavy [Tuesday], like a wet sponge," according to a trader.

He said most distressed issues were down 1 to 2 points "pretty much across the board."

"Most of the action was in the high-grade area, what with the stocks getting hammered," another trader said.

Lehman Brother Holdings Inc.'s debt was "strong and well-bid for," a trader said, as the company officially ended its stay in bankruptcy and announced the first of its distribution dates. The now-defunct investment bank spent nearly four years in bankruptcy.

Also in the financial realm, MF Global Holdings Ltd.'s paper was active and firmer, though on no fresh news.

Meanwhile, Hovnanian Enterprises Inc.'s bonds saw a fair amount of trading and the paper ended the day weaker. The homebuilder is scheduled to release earnings on Wednesday.

Lehman ends 1,268-day bankruptcy

A trader said Lehman Brothers' paper continued to be on the firm side, though essentially unmoved in terms of price on news the former investment bank was finally emerging from Chapter 11 protections.

He quoted the bonds generically at 28½ bid, 29 offered.

Another trader called the 6 7/8% benchmark notes better at 28 3/4.

"A whole lot of other bonds were trading around 28," he said of the company's debt structure.

Lehman's record $639 billion bankruptcy began Sept. 18, 2008 following the firm's collapse and the subsequent decline of the financial system. The case dragged on for nearly four years, or exactly 1,268 days.

Now that it has exited bankruptcy, Lehman will begin making distributions to creditors, the first coming on April 17.

A trader noted that the first distribution is "not a big distribution."

The firm still has some assets to divest and, as such, will continue the liquidation process.

MF Global steady to better

Elsewhere in the financial realm, MF Global's 6¼% notes due 2014 were deemed stronger by a trader, who placed the bonds around 343/4.

Another trader called the paper unchanged at 34.

There was no fresh news out on the bankrupt New York-based futures broker formerly run by Jon Corzine.

Hovnanian declines pre-earnings

Red Bank, N.J.-based homebuilder Hovnanian is slated to release earnings on Wednesday and ahead of the report, investors were pushing the company's debt downward.

One trader called the 10 5/8% notes due 2016 down 3 points around 88. Another market source placed the notes at 89¼ bid, down over 2 points on the day.

At another shop, a trader said the paper was "in a few points" at "881/2-ish."

Last week, Hovnanian said that it was expecting to report a 27% increase in preliminary net contracts in its first quarterly release of fiscal 2012. The company said that for the quarter ended Jan. 31, contracts had grown to 1,079, up from 850 the year before.

First Data drops

A trader said that First Data Corp.'s bonds "got hit hard today, " seeing the Atlanta-based credit-card transaction processor's 12 5/8% notes due 2021 down between 4 and 5 points, which he said left the bonds wrapped around par, while its 11¼% senior subordinated notes due 2016 were also down 4 to 5 points, at about 90 bid.

A second trader said the 12 5/8s were "down a good bit," quoting them at 99¾ bid, 1001/4, on "a lot of volume."

He quoted the 11¼ notes 3 points lower on the day at 89¼ bid, 90 offered.

The slide in the bonds followed the disclosure in a Securities and Exchange Commission filing that a majority of the company's lenders had approved extending the maturities on more than $6 billion term loan debt due in 2014 to March 2017.

The lenders also gave the green light to First Data issuing new senior secured notes to prepay a portion of the term loan debt.

AES powers down

A trader said that AES Eastern Energy LP's 9.67% notes "are down hard," quoting the bonds wrapped around 23 bid, down from prior levels around the lower 30s.

There was no fresh news on the Ithaca, N.Y. company, a subsidiary of power generation company AES Corp. AES Eastern - though not its parent - filed for Chapter 11 in December to effectuate the sale of two power plants to reduce leverage.

Broad market dips

In other distressed issues, ATP Oil & Gas Corp.'s 11 7/8% notes due 2015 slipped half a point to 671/2, a trader said.

Another market source called Caesars Entertainment Corp.'s 10% notes due 2018 off a deuce at 74 bid.

Meanwhile, a third source said NewPage Corp.'s 11 3/8% first-lien notes due 2014 were modestly higher, trading around 62.

Yet another source said Hawker Beechcraft Acquisition Co.'s 8½% notes due 2015 were "down a bunch," trading in a 13-14 context.

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.