Distressed debt ends mixed, better than equities; TXU trades higher; NewPage holds its ground

By Stephanie N. Rotondo

Portland, Ore., Oct. 27 - Distressed debt was "kind of mixed all day," a trader reported Wednesday.

Another trader said that while it was "certainly not a terrible day," most of the activity was new issue-driven.

Still, he added that the secondary market "shrugged off [losses in the] stock market and just kept chugging along."

Both Energy Future Holdings Corp. and NewPage Corp. managed to end the day a tad higher than the day before. There was no fresh news out to explain TXU's gains, though decent earnings in the sector might have boosted NewPage.

Meanwhile, First Data Corp. traded actively - about $70 million of the company's various issues changed hands - but closed out the day unchanged.

Activity in the chemical arena could have resulted in improvement seen in Tronox Worldwide LLC's debt. A couple of new issues from chemical makers hit the market on Wednesday and investor attention could have been such that it seeped over into Tronox.

In earnings news, Sprint Nextel Corp. reported a wider quarterly loss, though it also posted an increase in customers. Still, the larger loss put pressure on the bonds.

OPTI Canada Inc. is scheduled to release its quarterly report on Thursday. However, the bonds were unchanged by the end of business Wednesday.

TXU powers up

"Big hunks" of Energy Future Holdings paper changed hands during the midweek session, a trader said.

He called both the 10% notes due 2020 and the 10 7/8% notes due 2017 up half a point at 105½ and 721/4, respectively.

Another trader also said the debt closed "a little bit better," quoting the 10 7/8% notes at 72 bid, 72½ offered.

There was no news out on the Dallas-based energy company.

NewPage holds steady

NewPage notes were "not quite as active as they had been," according to a trader, as the company's rival International Paper Inc. posted earnings that beat analyst estimates.

The trader did note, however, that at least $15 million of the 11 3/8% notes due 2014 traded around 96, which he called up half a point. The 10% notes due 2012 meantime closed "up fractionally" around 63.

At another shop, a trader said the 11 3/8% notes were unchanged in the "96-ish area."

Another trader said the 11 3/8% notes were not much changed, "probably just tighter" at 96 bid, 96¼ offered. That compared to Tuesday markets of 95½ bid, 96½ offered.

He also called the 10% notes up slightly around 63.

Catalyst Paper also firm

Catalyst Paper Corp.'s bonds closed unchanged, the 11% notes due 2016 at 89½ bid, 90½ offered and the 7 3/8% notes due 2014 at 58 bid, 60½ offered.

International Paper reported a 7% increase in its quarterly profit, helped out by rising paper prices and renewed demand.

Domestic papermakers also got a boon last week, as the U.S. International Trade Commission ruled that Chinese and Indonesian coated paper subsidies hurt U.S. paper producers, and therefore called for such imports to be taxed.

"NewPage is very pleased with the International Trade Commission's finding on injury," said George Martin, president and chief executive officer of Miamisburg, Ohio-based NewPage, in an Oct. 22 press release. "[The] determination underscores the effects of unfair competition on the U.S. industry, where government subsidies and dumping have suppressed prices and forced mill closures.

"The decision will allow the Commerce Department to impose duties to offset the significant levels of dumping and government subsidies that were found to exist last month," Martin added. "We will remain committed to this effort and it's important to remember that we are willing to compete with anyone in the world as long as we have a level playing field."

First Data active, unchanged

First Data's 10.55% notes due 2015 traded in good size Wednesday, though there was no news out on the Atlanta-based electronic payment processor.

A trader said about $40 million to $50 million of the notes turned over at 84¾ bid, 85 offered. Another "$20-odd million" of the 9 7/8% notes due 2015 traded as well, at the same level as the 10.55s.

Another trader called the 10.55% notes active but unchanged, seeing the paper at 84 7/8.

But another market source deemed the 9 7/8% notes down half a point at 85 bid.

Elsewhere in the wide world of financial-related credits, a trader saw American International Group Inc.'s 6¼% notes due 2037 trading up 1½ points to 911/2. He said the debt had been around 89¾ "prior to this little pop."

Another trader said Washington Mutual Inc.'s senior bank paper was "inching up a little bit," closing around 373/4.

"So that's creeping back up from its lows," he said.

Tronox buoyed by sector news

A trader called price action in Tronox Worldwide's 9½% notes due 2012 "interesting," as the notes jumped during the trading day.

However, he noted there was only one trade, quoting the paper at 106 bid, 106¼ offered. That left bids around 110, he said.

"They were in the low-90s a week ago," he said. "There is definitely something going on there."

One thing "going on" for Tronox is the expectation that the company will soon emerge from Chapter 11 protections. Another is that recent activity from other chemical issuers - including Hexion and Momentive Performance Materials - might be encouraging investors to get involved in the sector.

Sprint's loss pressures bonds

Despite reporting its best customer gain in four years, a wider-than-expected quarterly loss pushed Sprint Nextel notes to lose ground, according to traders.

One market source said the 6% notes due 2016 dipped about half a point to end around par, while the 8¾% notes due 2032 fell "a point or so" to levels around 110.

At another desk, a trader said "$25-odd million" of the 6% notes traded around par, while $15 million to $20 million of the 8¾% notes moved at 1101/2, down "a little bit."

The second trader also saw the 6 7/8% notes due 2028 finishing around 95.

For the third quarter, the Overland Park, Kan.-based telecommunications provider added 644,000 new wireless subscribers, mostly in its postpaid unit.

Net loss, however, came to $911 million, or 30 cents per share. The year before, the company had posted a loss of $478 million, or 17 cents per share.

Sprint had about $4.7 billion in cash and equivalents by the end of the quarter and generated $384 million in free cash flow.

"Sprint continues to make progress on some fronts, while sliding on others," wrote Gimme Credit LLC analyst Dave Novosel in an afternoon note to clients. But he added that the company was likely not in "imminent danger," given is current cash flow.

OPTI steady pre-numbers

OPTI Canada's bonds ended Wednesday unchanged as the Calgary-based company prepared to announce its quarterly results on Thursday.

A trader quoted the 8¼% notes due 2014 at 72½ bid, 73½ offered.

Sbarro attempts rally

A trader saw odd-lot markets for Sbarro Inc.'s 10 3/8% notes due 2015 "bracketing 40."

Another market source saw the notes rising 3 points to 39 bid.

There was no news out on the Melville, N.Y.-based fast food chain.

Broad market mixed

Among other distressed credits, a trader said General Motors Corp.'s benchmark 8 3/8% notes due 2033 were "a smidge weaker" at 35 bid, 35½ offered.

Tribune Co.'s debt, on the other hand, traded up to around 49.

The newspaper publisher's bonds tend to trade in line with one another.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.