Sirius XM debt spikes on investment news; Trump, Harrah's bonds lower; Charter bonds take top spot

By Stephanie N. Rotondo

Portland, Ore., Feb. 17 - After spending much of the previous week on a downward descent, Sirius XM Radio Inc.'s debt spiked during Tuesday trading.

Traders reported that bonds linked to both Sirius and XM separately gained anywhere from 6 to 25 points following news that the company had secured $530 million in financing from Liberty Media Corp.

Meanwhile, Trump Entertainment Resorts Inc. announced it filed for bankruptcy Tuesday. But the news did little to spark interest. Conversely, Harrah's Entertainment Inc.'s bonds dropped a couple points on new reports of a bondholder lawsuit.

Charter Communications Inc. will be filing for Chapter 11 in the next couple of months. The company made that announcement last week and investors are still reacting, traders said. As such, the bonds were seen as one of the most active names of the day and closed higher overall.

A trader said there was a "little bit of a flourish" in trading on the first day back from a long weekend. He called the day "pretty active for a day after a holiday," though some market players were taking advantage of the long weekend and were still away from their desks.

Sirius XM spikes

Sirius XM Radio's bonds jumped in Tuesday trading on news that Liberty Media, the owner of DirecTV Group Inc., was investing in the struggling satellite radio provider.

One trader called Sirius' 9 5/8% notes due 2013 around 51, compared with levels around 45 on Friday. He noted that the bonds were offered in the high-70s post-news, but came back down to meet bids.

The trader also saw the 10% notes due 2009 linked to XM "up huge" at 75 bid, 76 offered from around 43 previously.

At another desk, a trader also placed the XM notes at 75 bid, 76 offered and the Sirius debt at 50.

Another market source deemed XM's 13% notes due 2013 up 15 points on the day at 60 bid. However, the source saw Liberty Media and DirecTV's debt sliding, the 5.7% notes due 2013 down more than 4 points to 76.5 bid and the 6 3/8% notes due 2015 a point weaker at 92.5 bid.

Liberty Media will invest a total of $530 million in Sirius XM, a move that saves the company from a bankruptcy filing.

Under the terms of the deal, Liberty will lend Sirius $280 million, $250 million of which the company will receive Tuesday. Proceeds from the 15% loan maturing in December 2012 will also be used to partially pay a $175 million coupon payment, also due Tuesday.

After that transaction, Liberty will loan $150 million to XM. Liberty has also offered to buy up to $100 million of XM's outstanding debt.

Once both parts of the deal have been completed, Sirius XM will issue 12.5 million preferred shares to Liberty. The shares can then be converted into 40% of the company's common stock. However, the deal does not constitute a change of control.

Trump, Harrah's lower

As has been expected since the missed coupon in December, Trump Entertainment Resorts filed for bankruptcy protections Tuesday.

The news added more pressure to the casino operator's debt, though traders said there were few trades in the name.

A trader pegged the 8½% notes due 2015 at 13, down just half a point. But another called the bonds down 3 points at 11 bid, 13 offered.

The Atlantic City casinos laboring under Donald Trump's moniker - something that The Donald said he was "not thrilled about" - filed for Chapter 11 for the third time after missing a $53.1 million interest payment on Dec. 1, 2008. The company had entered into discussions with bondholders regarding a potential restructuring and those talks were extended four times before the filing came Tuesday.

Trump, unlike most other bankrupt companies, is not seeking debtor-in-possession financing, choosing instead to use cash on hand to fund operations.

Elsewhere in the sector, Harrah's Entertainment's bonds slipped a couple points, a trader said, following news that the company was being sued.

The trader quoted the 10¾% notes due 2016 at 13 bid, 14 offered, versus 16 bid, 17 offered last week. He also saw the 5 5/8% notes due 2015 trade around 6.

"All that longer stuff is now like 5 bid, 7 offered," he said. "No fun there."

Two bondholders are joining forces to sue Harrah's over its recent debt swap. The lawsuits, which were filed last month, claim that the deal leaves some debtholders in the lurch upon default or bankruptcy.

One of the parties, S. Blake Murchison, also recently filed a suit against Station Casinos Inc., alleging that the company's reorganization plan does not treat bondholders fairly.

Station said Tuesday that it would skip an interest payment on its 7¾% notes due 2016. Traders reported little to no action in the name, though one source saw the 6% notes due 2012 at 24 bid, down a deuce.

Meanwhile, MGM Mirage's debt was also weaker. A trader called the 6% notes due 2009 2 points lower at 76, while the 7½% notes due 2016 and the 5 7/8% notes due 2014 were 1 to 2 points weaker at 48.25 and 47.25, respectively.

Charter takes top spot

Trading in Charter Communications' debt "dominated," a trader said, as investors continued to react to last week's news that the cable provider will file for bankruptcy by April 1.

The trader saw about $32 million of the 10¼% notes due 2010 trade at 85.5, a gain of 9 points. He also saw the 8¾% notes due 2013 at 86.5, a gain of 5.5 points, with about $16 million changing hands. He added that most other issues were up 5 to 8 points on the day.

Another trader deemed the 10¼% notes a good 12 points better at 86 bid, 87 offered and the 8¾% notes around 86 from 80 bid, 81 offered previously.

"People are trying to sort out what they are going to get on each issue," the trader explained as reason for the surge in activity.

St. Louis-based Charter said last week that negotiations with bondholders had led to the decision to file for Chapter 11 protections. Charter missed a coupon payment in January.

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