Sprint, Clearwire post gains on funding news, interest payment; AMR senior notes busy, rebound

By Stephanie N. Rotondo

Portland, Ore., Dec. 1 - The distressed debt market kicked off December "kind of higher late in the day," a trader said Thursday.

Sprint Nextel Corp. was on the rise following word that it had reached a funding agreement with its network partner Clearwire Corp. That news, along with a $237 million interest payment made, helped Clearwire paper run up as well.

AMR Corp. remained an actively traded name. The senior notes were gaining altitude during the session.

Sprint, Clearwire boosted

Sprint Nextel and Clearwire announced that the network partners had reached a four-year funding agreement that will give Clearwire time to build out its 4G network.

The deal is valued as high as $1.6 billion.

Sprint paper was trading actively on the news and higher. A trader saw both the 6% notes due 2016 and the 8 3/8% notes due 2017 up a deuce at 82 and 88, respectively.

Another market source deemed the 6% notes up 2½ points at 82¼ bid.

The first trader also saw Clearwire's 12% notes due 2017 trading around 70. Another source echoed that, noting that the last round lot trade in the issue was around 44.

Clearwire will receive $926 million from Sprint - its largest stakeholder - for unlimited usage of its WiMax 4G network through 2013. The funds will allow cash-strapped Clearwire to operate through at least 2012. Sprint will provide $350 million in prepayments for use of a new LTE network and could pony up $347 million towards an equity offering.

After 2013, Sprint will no longer receive unlimited network usage and will be charged based on what it uses.

Additionally, Kirkland, Wash.-based Clearwire made a $237 million interest payment on its notes due Dec. 1, which include the 2017 maturity, the 12% notes due 2015 and the 8¼% notes due 2040.

Sprint is an Overland Park, Kan.-based telecommunications provider.

AMR inches higher

A trader called AMR's 10½% notes due 2012 the most active issue of the day.

He saw the senior notes inching up 1½ points to 883/4.

At another shop, a trader said the were "the most active bond today" in junk bond land, with a lot of paper trading up and down in a bid range of 871/2-to-89, before ending the day at 88½ bid. He called that unchanged to perhaps down a quarter-point.

There was "just a lot of volume" in the Fort Worth, Tex.-based airline holding company's shortest issue.

At another desk, a market source pegged the bonds down by three-quarters of a point, at 881/2, on volume of almost $63 million.

The bonds have been modestly declining since the parent company of American Airlines filed for bankruptcy on Tuesday. The unsecured issues have been hit the worst, falling from levels in the mid-40s to levels in the teens.

The unsecureds, however, have been slowly moving back up, despite a belief that the paper will be worth next to nothing in the end.

AMR is based in Forth Worth, Texas.

Caesars gains

Caesars Entertainment Corp.'s 10% notes due 2018 were seen "bouncing back" to 653/4, according to a trader.

He called that a 2-point gain on the day.

But another source saw the notes up only a fraction of a point at 65¼ bid.

Caesars is a Las Vegas-based casino operator.

Paul Deckelman contributed to this article

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