Distressed debt hurt by softer equities; Kodak firm ahead of new issue; Dynegy recoups losses

By Stephanie N. Rotondo and Paul Deckelman

Portland, Ore., March 10 - The distressed debt market was "obviously heavier" Thursday, a trader said, as equities diminished amid poor economic data and gyrating oil prices.

"The market definitely felt squishy," the trader said.

Eastman Kodak Co. paper was about the same to better on the day as the company priced a new issue. The new deal was upsized to $250 million from $200 million, but a trader said he didn't see much activity in the new notes.

Meanwhile, Dynegy Inc. recovered some of the losses incurred during Wednesday's session. The bonds had fallen off as a result of a bankruptcy filing warning the company issued in a regulatory filing late Tuesday.

The overall negative tone of the market also caused some credits - particularly ones that had experienced a steady upward climb recently - to lose ground, with no news to act as catalyst. Such losers included NewPage Corp. and Clear Channel Communications Inc.

Kodak steady on new issue

A trader said Eastman Kodak's 7¼% notes due 2013 were "not really at much different levels" after the company priced a new issue.

He quoted the notes at 99 bid, par offered.

Another source echoed that market, while a third deemed the debt down nearly a point at 98¼ bid.

The Rochester, N.Y.-based company's new deal was increased to $250 million from $200 million on Thursday. The notes were priced at 98.686, with a 10 7/8% yield. The eight-year senior secured second-lien notes carry a coupon of 10 5/8%.

On Wednesday, Moody's Investors Service assigned a B1 rating to the issue. Come Thursday, Standard & Poor's gave it a CCC rating.

The company will use proceeds for general corporate purposes, including the repurchase of debt.

Dynegy recoups losses

Dynegy paper regained the bulk of the ground lost in the midweek session after the company warned of a potential bankruptcy filing.

A market source called the 7¾% notes due 2019 about 1 point better at 69½ bid. Another source said the notes were "about unchanged" at 68 bid, 70 offered.

However, the second source noted that the bonds were "trading wildly" in that range.

The source also saw the 8 3/8% notes due 2016 at 76½ bid, 77½ offered, versus 75½ bid, 76½ offered on Wednesday.

Late Tuesday, the Houston-based power producer filed its 10-K. While the numbers were in line with expectations, the company said that its overleveraged profile might force it into Chapter 11, as it would likely fall out of compliance on its bank debt facilities by mid-year.

In the past six months, Dynegy has rejected two buyout offers, one from Blackstone Group LP and one from billionaire investors Carl Icahn.

Recent winners turn losers

As the market took a turn for the worse, companies like NewPage and Clear Channel - which had seen steady gains in its debt in recent trading - saw their bonds getting hit.

A trader said NewPage's 10% notes due 2012 fell to 66 bid, 67 offered, down from recent levels around 70.

"So they're off a good bit," he said.

Clear Channel's 11% notes due 2016 meantime dipped to 91 ½ bid, 92 offered from 93 bid, 94 offered just two days ago, the trader said.

"They definitely gave some back," he said.

At another shop, a source saw Rite Aid Corp.'s 8 5/8% notes due 2015 declining by 2 points to 91 bid.

Solo Cup unchanged

A trader said that Solo Cup Co.'s 10½% senior secured notes due 2013 "are hanging in there," around the 1031/4-103½ area, with "a fair amount" of the bonds changing hands.

However, he saw the company's 8½% senior subordinated notes due 2014 trading down around the mid-80s from recently higher levels, although he said that the downturn was "not all in one day."

In Thursday's dealings, he saw the bonds trading down around an 841/4-84½ context, versus 85-85¼ on Wednesday.

There was no fresh news out on the Lake Forest, Ill.-based manufacturer of paper and plastic cups, plates, bowls and utensils.

OPTI debt dips

A market source said that OPTI Canada Inc.'s 8¼% notes due 2014 were down a deuce on Thursday to finish at 53 bid.

A Canadian newspaper meantime quoted the president and chief executive officer of OPTI Canada's partner in its pilot Long Lake, Alta. oil-shale plant, Nexen Inc., as having said that his company sees no need to buy out OPTI Canada's 35% stake in that project. The troubled Calgary, Alta.-based OPTI has recently been exploring the possibility of selling assets, or even the whole company, but has so far not found any potential buyers.

The Edmonton Journal quoted Nexen boss Marvin F. Romanow as having declared during an interview that "there's no driving necessity for us to own all of it," adding that his company has a "healthy working interest at 65%."

© 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.