Sprint, Clearwire rally into midweek; Caesars up despite gaming report; Springleaf debt climbs

By Stephanie N. Rotondo

Portland, Ore., Oct. 12 - Distressed debt was "strong," a trader said Wednesday and volume was also on the rise.

"The market continues to rally," another trader said.

Sprint Nextel Corp. and its network partner Clearwire Corp. saw their bonds continuing to rebound from Friday's lows. Paper had gotten beaten up when Sprint said it would discontinue selling devices compatible with Clearwire's network by the end of 2012.

Sprint further suffered last week when company executives failed to provide investors with the financial impact of adding Apple Inc.'s iPhone to its lineup. Sprint said Wednesday it would remedy that in its third-quarter earnings conference call.

Meanwhile, Caesars Entertainment Corp. was again strong, despite a weak monthly report from Nevada's gaming commission.

And, a trader said Springleaf Finance Corp.'s debt was "cranking up" yet again, after getting beat down on fears about the company's ability to form a real estate investment trust and to pay down its debt.

Sprint, Clearwire rally on

A trader said Sprint Nextel's 8 3/8% notes due 2017 were up "almost 5 points" at 92.

Another market source called the 6% notes due 2016 up 4½ points at 85½ bid.

Sprint's network partner Clearwire meantime saw its debt "up a bunch," according to a trader. He saw the 12% first-lien notes due 2015 in the high-70s and the 12% second-line notes due 2017 in the mid-40s.

Last week, Sprint held an investor conference in which it said that it would discontinue selling devices compatible with Clearwire network by the end of 2012. That particularly hurt Clearwire, which has been struggling to stay afloat.

Sprint also got hit as executives failed to address concerns about the financial impact of adding Apple's iPhone to its portfolio.

In a news interview, James Hance, chairman of Sprint, said the failure was a "mistake" and one that the company will address at its third-quarter conference call.

Sprint is based in Overland Park, Kan. Clearwire has its headquarters in Kirkland, Wash.

Caesars wins, Nevada doesn't

Las Vegas-based casino operator Caesars saw its 10% notes due 2018 gaining about 3 points on the day, despite a dismal monthly report from Nevada's gaming commission.

Several traders saw the issue trading around 69 in Wednesday trading.

In its August report, the Nevada Gaming Control Board reported that casinos won $887 million, which was down 6.1% from the previous year. On the Las Vegas Strip, revenues were down 8.7% year over year.

Springleaf climbs again

Springleaf Finance's 6.90% notes due 2017 were "cranking up," a trader said.

He called the issue up a deuce at 74.

Another trader agreed that the debt was up 1 to 2 points on the day, though he declined to give trading levels.

Springleaf was formerly known as American General Finance and used to be a division of American International Group Inc. The unit was spun off and then bought by Fortress Investment Group.

But the company is laboring under a mountain of debt, including $756 million that matures this year and $2.04 billion that comes due in 2012. Springleaf had previously announced plans to form a real estate investment trust, which would then buy certain assets, allowing the parent company to pay its debts.

Due to recent market conditions, however, those plans have been derailed.

Retailers rebounding

A trader said that "beaten up retailers have climbed back a bit."

Claire's Stores Inc.'s 8 5/8% notes due 2019, for instance, were trading around 76 after touching into the high-60s recently.

Sears Holding Corp. was also higher, the 6 5/8% notes due 2018 at 84 versus recent levels around 80.

At another desk, a source called Rite Aid Corp.'s 8 5/8% notes due 2015 up 2 points at 89½ bid.

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