Ceasars bonds active, weaker; Edison unfazed by dip in earnings; OPTI holding steady

By Stephanie N. Rotondo

Portland, Ore., May 3 - Traders said Tuesday was a busy trading day, but most of the focus was on new issues and five-B paper, not distressed credits.

"There's just not a lot of distressed stuff going on, especially given that [General Motors Corp.] can't trade," a trader said.

Another distressed-debt trader said that "a lot of these things seem to be stuck in a range."

He characterized the overall market as "a little blah - it was a pretty quiet day for me in distressed. I had less on my pad today than [Monday]."

There was a decent amount of action, however, in Caesars Entertainment Corp.'s debt, though there was no news out to act as a catalyst. Traders said the bonds were weaker to unchanged on the day.

Meanwhile, Edison International's notes were a bit more active but unmoved following the company's earnings release on Monday. Also in the energy realm, OPTI Canada Inc.'s subordinated debt was still holding its ground.

In the retail space, Sears Holdings Corp. issued an earnings warning late Monday, revising its first-quarter forecast to reflect a loss instead of a previously expected profit. That news pressured the company's debt, resulting in a 1- to 2-point loss.

Harrah's bonds slip

A trader said about $50 million to $60 million of Caesars Entertainment's 10% notes due 2018 changed hands at around 93, which he called down "a solid half-point."

"It's busy every day," he said, noting that there was no news out to cause the volume. "But it's had such a big run up, I think people took a little pause."

The trader also saw the 12¾% second-lien senior secured notes due 2018 at 1021/2, "basically unchanged."

Another trader called the 10% notes down nearly a point at 93, while another placed the issue at 93½ bid, also down almost a point.

Caesars, formerly known as Harrah's Entertainment, is a Las Vegas-based casino operator.

Edison not much moved

Edison International reported its first-quarter results Monday, showing a 15% drop in earnings.

However, the disappointing results "didn't seem like it really moved the needle much," a bond trader said, calling the 7% notes due 2017 "in line with where it had been" at around 79.

Another trader saw the paper falling a quarter-point to 791/4.

The Rosemead, Calif.-based power producer posted net income of $200 million, or 61 cents per share, for the first quarter. For the same quarter of 2010, net income was $236 million, or 72 cents per share.

Revenue was also weaker at $2.78 billion.

But the company said the earnings were in line with its 2011 guidance and reaffirmed its annual outlook of earnings between $2.60 and $2.90 per share.

OPTI bonds stabilize

Also in the energy space, OPTI Canada's subordinated paper - the 7 7/8% and 8¼% notes due 2014 - were still seen holding in around the 53 mark, traders reported.

One trader said the level was "kind of unchanged," while another said it was "not all that different, maybe a little bit lower."

The bonds have been stable at these levels since last week when the Calgary, Alta.-based oil-sands producer said it would likely miss its 2011 production target.

Sears dips on warning

Sears Holdings' debt was softer "on the back of lesser numbers," a trader said, referring to the company's warning late Monday regarding its first-quarter results.

The trader said about $25 million to $30 million of the 6 5/8% notes due 2018 turned over at 96 bid, 96¼ offered. That compared to Monday levels of 98 bid, 98¼ offered, he said.

Another trader called the 6 5/8% notes down a point at 95½ bid, 96 offered.

The second trader also saw the 7% notes due 2032 at 82 bid, 83 offered.

Late Monday, the Hoffman Estates, Ill.-based retailer said its domestic comparable-store sales were expected to fall 3.6% for the quarter ending April 30. Additionally, Sears said it expected to post a loss of $145 million to $195 million.

The market had previously been expecting a profit. Last year, the company reported net income of $16 million, or 14 cents per share.

"2010 was another challenging year for Sears Holdings," wrote Edward S. Lampert, chairman of Sears, in a Feb. 24 letter to shareholders. "Our financial results remain at unacceptable levels, and we are working to drive better performance in both the short and long term."

MBIA bounces around

A trader said that MBIA Inc.'s 14% surplus notes due 2033 "was bounced around a little bit today." He saw the bonds finishing at around 56 bid, saying they were "pretty actively quoted today and there were some trades in them."

He called the bonds up a point, and while saying it was impossible to determine how many bonds traded, since the issue does not Trace, "it does seem like a name that showed up today a few times."

There was no fresh news about the Armonk, N.Y. based bond insurer, which is locked in a court battle with major banks who are challenging the legality of the company's 2009 split of its insurance unit into two parts, segregating its safer municipal bond insurance business away from its risky mortgage-backed securities guaranty operations.

Lee loses refi bid

Lee Enterprises Inc.'s term loan weakened in reaction to the company's decision not to move forward with its refinancing, with one trader quoting the debt at 87 bid, 88 offered, down from 90 bid, 95 offered, and a second trader quoting it at 88¼ bid, 89¼ offered, down from 89 bid, 92 offered.

Late Monday, the company said that as a result of market conditions, it will no longer proceed with plans to offer $680 million of first-priority-lien senior secured notes due in 2017, $375 million of second-priority-lien senior secured notes due in 2018 and up to 8,928,175 shares of common stock.

The notes offering had gone through a number of changes since coming to market, including most recently seeing the second-lien notes shift to a second-lien term loan format.

Proceeds from the new debt were going to be used by the Davenport, Iowa-based newspaper publisher to refinance substantially all of its existing debt.

Broad market mostly steady

Also in the distressed debt space, a trader said Clear Channel Communications Inc.'s bonds were "not really all that active." He saw the 10¾% notes due 2016 inching up to 981/4, while the 5¾% notes due 2013 fell to 981/2.

At another shop, a trader said DirectBuy Holdings Inc.'s 12% notes due 2017 were "not all that changed" at 55 bid, 57 offered.

Sara Rosenberg and Paul Deckelman contributed to this article

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