Capmark bonds holding in there; Dynegy debt dips; AK Steel paper trades actively post-numbers

By Stephanie N. Rotondo

Portland, Ore., April 21 - Capmark Financial Group Inc.'s debt held in there as the company announced another amendment from its bank lenders.

The company said it secured a second extension on 94% of its bridge loan. Capmark has been using funds from the loan to fund operations.

Meanwhile, Dynegy Inc.'s bonds dropped as much as 3.5 points during the session. It was unclear what caused the move, though the equity had fallen in the previous session after an analyst downgraded the stock.

AK Steel Holding Corp. released its first-quarter results, and the better-than-expected numbers gave the bonds a boost - albeit a small one. However, the decent quarterly performance did serve to stir up interest in the name.

Capmark holding in

Capmark Financial Group's bonds closed the session unchanged to a tad higher after the company announced that it further extended its bridge loan maturity.

A market source quoted the 5 7/8% notes due 2012 at 23 bid, 24 offered and the 6.3% notes due 2017 at 22 bid, 23 offered. The former was up about half a point, while the latter was essentially unchanged.

Another trader said that Capmark's fixed rate bonds - its 5 7/8% notes and 6.3% notes - stayed in the lower 20s.

"I'd say 21-23 covers it," he said.

He also saw the company's floating-rate notes due 2010 at 35 bid, 37 offered.

The Horsham, Pa.-based financial services provider said late Monday that it had once again secured an extension from lenders, allowing the company to have use of most of its bridge loan until May 8.

Last week, Capmark was slated to release its annual report n April 15 - which was an extension from an earlier planned release. But in the final hour, Capmark said that it was unable to file the statement without severely impacting its resources.

Furthermore, it is expected that the company's auditors will raise concerns about its ability to continue as a going concern.

Dynegy debt dips

Dynegy's debt fell as much as 3.5 points on the day, just one day after the natural gas company's shares weakened over 10%.

A trader pegged the 7¾% notes due 2019 at 68.5 bid, 70.5 offered and the 7.67% notes due 2016 at 86 bid, 87 offered.

At another desk, the 7¾% notes were seen having dropped more than 3 points to 70 bid, 71 offered.

On Monday, shares of the company fell 12.2% following an analyst report that downgraded the equity to "hold."

In his report, Jeffries & Co. analyst Paul Fremont said that Dynegy was in danger of falling victim to weak natural gas prices. Its link to the commodity would likely put the company's liquidity position in jeopardy, he commented, estimating a 5-cent loss per share in 2009.

Also, on Tuesday, the company's top executive told a Bloomberg reporter that further consolidation within the power industry was unlikely until the recession had abated.

Dynegy is based in Houston.

AK Steel sideways post-numbers

AK Steel's paper traded rather actively, though traders saw the bonds ending virtually sideways.

A trader said about $20 million of the 7¾% notes due 2012 traded at 85 1/8. He called that unchanged, noting that the company had put out earnings early in the session.

"I thought the numbers were fine," he said, though there was no real price movement. "But it got some paper moving, so that's good."

Another source pegged the issue at 85 bid, 86 offered, up slightly from the previous day.

The West Chester, Ohio-based company posted better-than-expected results for the first quarter. Net loss came to $73.4 million, or 67 cents per share, compared with net income of $101.1 million the year before. On average, analysts had expected a 75-cent loss per share.

Sales dropped 49% to $922.2 million.

"Despite the worst market conditions in decades, AK Steel employees responded with outstanding cost and quality performances in the first quarter," said James L. Wainscott, chairman, president and chief executive officer, in a statement. "The hard work our company has performed over the past five years allowed us to endure a quarter of record low steel shipments, and positions us well to make the most of improving markets the balance of the year."

In related news, Ford Motor Co.'s 7.45% notes due 2031 closed at 35.5, with about $20 million trading, according to a trader. He added that other issues under the Ford umbrella - as well as those of rival General Motors Corp. - were "suspiciously quiet."

Ford will release its quarterly results on Friday.

Broad market mixed

Among other distressed issuers, Rite Aid Corp.'s 9½% notes due 2017 continued to see "big action," in the words of one trader. He quoted the bonds at 37.5 bid, 38 offered.

Another trader said he was "not sure what is going on there," placing the issue at 37 bid, 38 offered.

Six Flags Inc.'s 9 5/8% notes due 2014 were quoted wide at 15 bid, 19 offered. Moody's Investors Service, following in the footsteps of Fitch Ratings, deemed a recently announced debt swap a distressed exchange.

Charter Communications Inc.'s 11¾% notes due 2011 finished unchanged at 2 bid, 3 offered.

A trader saw Chemtura Corp.'s predecessor company Great Lakes Chemical Co.'s 7% notes due on July 15 move up to a round-lot level of 19¾ bid, from 15 on Monday, with $6 million traded. He noted that the bankrupt company's bonds have defaulted and are thus not currently paying interest; otherwise, he said the notes would be yielding an astronomical 1,677%.

In that same sector, Hexion Specialty Chemicals' 9¾% notes due 2014 were down more than 2 points to 30 bid.

Paul Deckelman contributed to his article.

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