Tekni-Plex, Pliant better in active trading; Quebecor gives back gains; Calpine slips with stock

By Stephanie N. Rotondo

Portland, Ore., Jan. 18 - Friday was an early close for the bond market. Typically, traders view early closures as a day to catch up, maybe get some trading done.

But that was almost impossible in Friday's market.

"It was a very uneventful day, as you can imagine," one trader said, after a week of tumultuous activity in the broader marketplace. "Most everybody is gone already."

During the week, the equity market took a ride, gaining, losing, gaining, losing again. With an uncertain stock market, investors were all the more hesitant to jump into the distressed arena. The result was a relatively quiet week for distressed bond traders.

As Friday came to a close, it seemed most names in the junk sector were drifting lower with a once again weaker equity counterpart. Still, there were some that attempted to buck the trend.

Activity in packaging companies such as Tekni-Plex Inc. and Pliant Corp. picked up Friday. Both names were better on the day, even as Tekni-Plex announced a forbearance agreement with some of its noteholders. There was no fresh news out on Pliant.

Meanwhile, Quebecor World Inc. gave back the gains it earned in the previous session. The printer's debt slipped anywhere from half a point to 4 points on the day.

Following yet another decline in its new when-issued common stock, Calpine Corp.'s debt was unchanged to slightly weaker on the day. The power producer is slated to emerge from bankruptcy by the end of the month.

Tekni, Pliant better

On Thursday, Tekni-Plex announced that it entered into a forbearance agreement with a majority of the holders of its 12¾% notes due 2010 and its 8¾% notes due 2013. The agreement relates to the company's default on Dec. 17 under the subordinated indenture.

According to one trader, the packaging company's bonds were quoted more," trading "with bills due to the seller." The trader pegged the 8¾% notes at 91 bid, 93 offered.

At another desk, a trader said Pliant's 11 1/8% notes due 2009 were "up a good deal...people were chasing them." He deemed the debt better at 80 bid, 81 offered.

Late in 2007, packaging companies took an unexplained hit. Speculation ranged from hedge funds liquidating positions to general concern over the sector.

Tekni-Plex seemed to justify the slips when it missed its Dec. 17 coupon payment and then announced it would enter into restructuring talks. The newly inked forbearance agreement, the company said, is a move to achieve that goal as the company looks to clean up its balance sheet.

Quebecor loses earlier gains

Quebecor World could not hold on to the gains it earned in the previous session, and the company's debt fell anywhere from half a point to 4 points on the day.

A trader quoted the 9¾% notes due 2015 at 57.5 bid, 59.5 offered, the 8¾% notes due 2016 at 56.5 bid, 58.5 offered, the 6 1/8% notes due 2013 at 63 bid, 65 offered, down 4 points, and the 4 7/8% notes due 2008 at 68 bid, 70 offered, down 3 points.

Another market source pegged the 4 7/8% notes around 68.5, down 1.5 points, and the 6 1/8% notes around 65.75, down just half a point.

In the latest of deadlines the Canadian company is facing, the Toronto Stock Exchange said Thursday that the company is in danger of being delisted from the TSX. The company has 30 days to regain compliance, though what requirements it had failed to meet were not divulged.

Earlier this month, Quebecor's stock listed on the New York Stock Exchange was suspended after falling below the price threshold.

Calpine slips

Following a decline in its new when-issued common stock, Calpine's bonds drifted lower for the second straight session.

A trader called the bonds unchanged to slightly weaker, its 8½% notes due 2011 at 111 bid, 113 offered, down from 111.5 bid, 113.5 offered.

Another market source quoted the 7 7/8% notes due 2008 a half point weaker at 112.25.

The San Jose, Calif.-based company's when-issued stock, which began trading Wednesday, slipped more than 30 cents during the session, closing just over $16.

The company is scheduled to emerge from bankruptcy by the end of the month. However, that date could be pushed back to Feb. 5, as the company tries to finalize the terms of its exit financing. Calpine must exit Chapter 11 by Feb. 7 or else it could be in danger of losing its exit cash.

Mortgage names mostly lower

Countrywide Financial Corp.'s bonds continued to fall with its 3¼% notes coming due this May down 2 points at 94 bid, 95 offered and its 6¼% notes due 2016 off 3.5 points at 78 bid, 80 offered.

A trader said there was no specific reason for the latest decline except that "in general, they went up in a big burst, but ever since the news came down that they were going to be bought, they've been losing 2 or 3 points a day." He noted that the 6¼% notes began the week at 93 bid, 94 offered "and they dropped throughout the week."

Another trader saw "a little bit of weakness" in the Countrywide issues, with the 6¼% notes at 80 bid, 82 offered, down from recent levels around 84 bid, 86 offered, while the 3¼% notes fell to 94 bid, 96 offered, off 2 points.

Thornburg Mortgage Inc.'s 8% notes due 2013 were also down 1.5 points at 81 bid, 83 offered.

Residential Capital LLC's 6½% notes due 2013 gained 2 points to 55 bid, 57 offered. Its corporate parent GMAC LLC's 8% notes due 2031 were unchanged at 78 bid, 79 offered, while the 6 7/8% notes due 2012 were half a point down at 81.

Broad market mixed

Linens n'Things floating-rate notes due 2014 were called active and better by one trader, who placed the bonds at 42.5 bid, 43.5 offered from 40 bid, 41 offered in the previous session.

Another trader quoted the retailer's bonds at 42 bid, 44 offered.

Blockbuster Inc.'s bonds were up slightly, following an earlier decline prompted by the news that Apple would enter the movie rental business through iTunes. A trader pegged the 9% notes due 2013 at 77.5 bid, 79 offered.

Standard Pacific Corp.'s 9¼% subordinated notes due 2012 were up 2 points over the week at 37.5 bid, 39.5 offered, a trader said. Meanwhile, WCI Communities Inc.'s 4% convertible notes due 2023 - deemed the big winner of the week - closed down slightly from the previous day's highs to 73 bid, 75 offered.

Another trader called Beazer Homes USA Inc.'s 8 5/8% notes due 2011 up 2 points at 72 bid, 73 offered, while Standard Pacific's 7% notes due 2014 were half a point better at 61 bid, 62 offered. He also saw WCI's 9 1/8% notes due 2012 drop a point to 51 bid, 53 offered.

Hines Horticulture Inc.'s 10¼% notes due 2011 fell to 71 bid, 73 offered from 73 bid, 75 offered previously.

Tembec Inc.'s 8½% notes due 2011 were quoted down 3 points at 41 bid.

Paul Deckelman contributed to this article.

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