Momentive Performance paper tumbles on default concerns; Verso exchange expires Thursday

By Stephanie N. Rotondo

Phoenix, Feb. 19 - Momentive Performance Materials Inc. continued to be notable in the distressed debt arena on Wednesday, as the company's bonds dropped as much as 13 points on the day.

"They've been slipping over the last few days," a trader said. In truth, the paper has been falling ever since Standard & Poor's cut its ratings on the company on Feb. 11.

In S&P's report, the agency also asserted that there was a reasonable likelihood that the company will either default or face a restructuring this year.

A trader called the 8 7/8% notes due 2020 off over a point at 104¼ and the 9% notes due 2021 down half a point at 87.

But it was the 11½% subordinated notes due 2016 that "really got beat," he said. The paper dropped 13 points to a 52 to 55 context from 65 to 68 previously.

Another trader pegged the 11½% notes in a 53 to 54 ZIP code, down from around 65 on Tuesday.

He also saw the 9% notes at 86 bid, 87 offered, which was "down a little bit."

Momentive is a Columbus, Ohio-based specialty chemicals producer.

Elsewhere in the distressed space, a trader said Verso Paper Corp.'s 11 3/8% notes due 2016 were "up almost 4 points from the last trades last week."

He placed the issue around 693/4.

In late January, Verso warned that its planned $1.4 billion merger with NewPage Corp. might not go through, as participation in a contingent exchange offer was lower than expected.

The exchange was originally slated to end Feb. 10 but was extended to expire on Thursday.

Verso is based in Memphis. NewPage is based in Miamisburg, Ohio.

Distressed odds and ends

Among other distressed issues, Arch Coal Inc.'s 9 7/8% notes due 2019 "bounced up a little bit," a trader said, seeing the notes inch up to 861/4.

The trader also saw Caesars Entertainment Corp.'s 10% notes due 2018 holding in around 49. Also "kind of unchanged" were Energy Future Holdings' 15% notes due 2020, which ended the session around 283/4.

And, NII Holdings Inc.'s 8 7/8% notes due 2019 gave up some ground, slipping to 551/2.

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