MF Global bonds weaken; DirectBuy quoted higher; Lehman Brothers remains busy, but unchanged

By Stephanie N. Rotondo

Portland, Ore., Dec. 7 - A trader said that it was "hard to tell what kind of tone we had" in the distressed debt market, as many investors were focused on new and recent issues.

He did characterize the day as "firm, but lethargic."

MF Global Holdings Ltd.'s debt was on the decline, a trader said. He attributed the losses to another array of headlines, some of which indicated that the "missing money may be gone for good."

Meanwhile, DirectBuy Holdings Inc.'s debt "continued to move up," he said. He noted that there is talk the company's bondholders are beginning to organize.

Lehman Brothers Holdings Inc.'s bonds continued to trade actively but were holding steady, according to another trader. The company's plan of reorganization was approved Tuesday, bringing an end to the case that began in late 2008.

MF Global loses ground

MF Global's 8¼% notes due 2016 were seen weakening on a variety of news reports regarding the bankrupt futures broker, a trader said.

He called the issue down a point around 33.

Another market source quoted the notes at 33 bid, 33½ offered, down from 34 bid, 35 offered previously.

The first trader said he had seen news that indicated that missing customer funds "may be gone for good."

Also, the firm's founder and former top executive, Jon. S. Corzine, is reportedly scheduled to appear before to a congressional panel to discuss where the missing funds might be.

The company filed for bankruptcy on Oct. 31 after a week of speculation and meltdowns brought the company to its knees. The straw was the revelation that the broker had $6.3 billion in exposure to European sovereign debt.

DirectBuy heads up

Merrillville, Ind.-based DirectBuy saw its 12% notes due 2017 quoted higher, according to a trader.

He saw the notes "straddling 30."

Earlier in 2011, the company had been slapped with a class-action lawsuit that alleged improper sales practices. A settlement was offered, then rejected, in May.

Also in May, the company saw its memberships decline by nearly 50%.

The trader said the buzz is that bondholders are organizing, which could mean a forced restructuring is imminent.

Lehman still active

Lehman Brothers' debt continued to trade actively, a trader reported, though in terms of price it was holding steady.

He placed the bonds - like the 6 7/8% notes due 2018 - around the 27 level.

The company's plan of reorganization was approved on Tuesday, bringing an end to the country's largest bankruptcy in history.

The defunct investment bank filed for Chapter 11 protections on Sept. 15, 2008.

Now that Lehman's plan has been approved, it can begin paying out what it owes to creditors, which is estimated at $65 billion.

Payouts are expected to being early in 2012.

Lehman may now also begin shutting down its remaining operations.

The firm has requested its bankruptcy exit occur after Jan. 31.

SuperMedia loan gains

SuperMedia Inc.'s term loan was stronger in the secondary market on Wednesday following news that a new $117 million cash offer size buyback for the debt was launched with a price range of 43 to 50, according to a trader.

The term loan was quoted at 48 bid, 50 offered immediately after the news hit, and then it came in to 47 bid, 49 offered by the afternoon, the trader remarked. Prior to the news, the debt was seen at 45 bid, 46½ offered.

Lender responses to the tender offer are due by 3 p.m. ET on Tuesday.

In November, the company had launched a repurchase transaction with the same cash offer size but a price range of 43 to 46. This offer was then pulled because of insufficient interest.

SuperMedia, a Dallas-based directory publisher, has the ability to buy back the term loan borrowings at a price below par using up to $122.5 million of cash until Jan. 1, 2014 as a result of a recently completed amendment to its credit facility.

Broad market mixed

Among other distressed issues, ATP Oil & Gas Corp.'s 11 7/8% notes due 2015 remained on the weak side, losing over half a point to close at 67, a trader said.

The trader also saw AMR Corp.'s 10½% notes due 2012 falling nearly a point to 91 5/8. Volume, he said, was light.

In telecoms, Clearwire Corp.'s 12% notes due 2017 were unchanged around 82, while Sprint Nextel Corp.'s 6% notes due 2016 were likewise steady at 82½ bid, 83 offered.

The trader noted that there was also light volume in those credits.

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