Distressed market opens week soft; Caesars ends mixed, second group cries fraudulent transfer

By Stephanie N. Rotondo

Phoenix, April 7 - The distressed debt market started the day with a weak tone, though overall activity was focused on one or two names.

"There were no real winners in the distressed world," one trader said.

However, investors were zeroing in on Caesars Entertainment Corp. as more stakeholders were decrying the company's transfer of assets to an affiliate.

At least two groups of debtholders are alleging a fraudulent transfer took place. For its part, Caesars is denying the claim.

Away from Caesars, several typically active names remained busy, but there were some off-the-run trades as well.

A trader said Momentive Performance Materials Inc.'s 9% notes due 2020 dropped almost 2 points to 781/4. Another trader pegged the issue around 78, down from 80 previously.

Last week, it was reported that the company is prepping a mid-April bankruptcy filing.

Meanwhile, Toys 'R' Us Corp.'s 10 3/8% notes due 2017 were seen falling a point to 82 by one trader. Another market source placed the 7 3/8% notes due 2018 at 78 bid, down half a point on the day.

In the coal space, Alpha Natural Resources Inc. was drifting lower, as a trader saw the 6¼% notes due 2019 slipping half a point to 77.

A second source deemed the 6¼% notes due 2021 off a like amount at 77½ bid.

And, NII Holdings Inc.'s 7 5/8% notes due 2021 dipped half a point to end around 30, according to a trader.

In names that are typically not all that active, a trader said Verso Paper Corp.'s 8¾% notes due 2019 slipped half a point to 49.

The trader also saw American Apparel Inc.'s 13% notes due 2020 at 89, down nearly a point.

Another trader echoed that level, calling that down from an 89½ to 89¾ context on Friday.

Continuing the half-a-point-weaker trend, iPayment Inc.'s 10¼% notes due 2018 closed down that much at 721/2.

In emerging market names, Desalladora Homex's 9¾% notes due 2020 lost almost a point, closing around 111/4.

Caesars leans weak

Caesars Entertainment debt was mixed on the day, though bonds were trending mostly toward the softer side.

"It's all Caesars," a trader said of the day's overall activity.

He said the 9% notes due 2020 fell almost a point to 87¾ and also saw the 12¾% notes due 2018 down about the same at 52.

However, the 10¾% notes due 2016 rose 1½ points to 86, he said, as the 10% notes due 2018 increased over half a point to 47 5/8.

The 11¼% notes due 2017 held in around 86.

Another market source deemed the 10% notes up just a quarter-point at 47 bid.

And, a third trader pegged the 9% notes around "871/4-ish," versus previous levels around 881/2.

After the market closed on Friday, the Las Vegas-based casino operator said in a regulatory filing that it had received a letter from "unnamed parties" claiming to be a group of lenders and bondholders who assert that the company's transfer of four properties - valued at $2.2 billion - to Caesars Growth Partners was a fraudulent transfer.

According to Caesars, which did not include the original letter in the filing, the group is claiming that both the parent and the affiliate were insolvent at the time of transfer and that the company breached its fiduciary duties.

The letter is the second Caesars has received since the transaction was announced in February. The company received the first one in March.

Not surprisingly, Caesars is claiming that there is no merit in the allegations and that it will fight them to the fullest.

© 2015 Prospect News.
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