WaMu debt takes a ride; First Data bonds still active, unchanged; LyondellBasell CAM heads up

By Stephanie N. Rotondo

Portland, Ore., March 12 - Distressed bonds ended the week largely unchanged, but to the firm side, traders reported.

Washington Mutual Inc.'s debt went on a ride following word that the bankrupt company and its parent JPMorgan Chase & Co. had reached a settlement regarding billions of dollars in assets. The bonds were among the day's more active issues, trading up and then settling back in.

Elsewhere in the world of financial services, First Data Corp.'s bonds continued to be active, just one day after the company released its quarterly results and announced a management shakeup. However, as with the rest of the market, traders deemed the bonds unchanged by the end of business.

Away from financial credits, LyondellBasell's bank debt headed higher after its Lyondell Chemical Co. subsidiary announced it would soon be entering the market with an exit financing credit facility.

WaMu debt takes a ride

Washington Mutual's bonds were "very active given the [JPMorgan] settlement news," a trader said.

The trader said that the bank seniors opened around 45, headed up to 50, then settled back to around 45.

"It was kind of a rollercoaster ride," he said.

The trader also saw the "holdco" bonds - such as the 4% notes that were to have matured in 2009 - gaining 1 to 2 points to around 104. Still, he noted that the holdco paper was "not as active" as the bank bonds.

Another trader said there was "a ton of trading" in the 0% notes due 2009 and 2010. He called the issues up a point, also trading with a 45 handle.

The trader also saw the 5 1/8% notes due 2015 trading, but he noted that the debt traded at "less than 1 total."

WaMu, JPMorgan and the Federal Deposit Insurance Corp. came to terms on Friday regarding a dispute over several billion in assets. Under the terms of the settlement, JPMorgan will return $4 billion in disputed deposits to WaMu, in exchange for more than $6 billion in other assets. The FDIC will receive $1.5 billion in federal tax refunds.

WaMu intends to use the funds to repay creditors.

Additionally, WaMu has agreed to drop a lawsuit regarding the role played by JPMorgan and the FDIC in its demise. Debtholders, however, still have the option of pursuing a case, which is already under way.

Seattle-based WaMu went under in September 2008. JPMorgan came to its rescue, paying $1.9 billion for the company's branches and deposits.

First Data active, unchanged

Also in the financial space, First Data's bonds continued to be active - though unchanged - just one day after the company released its fourth-quarter results.

A trader called the 10.55% senior PIK notes due 2015 "kind of unchanged" at 85 bid, 86 offered. He deemed the 9 7/8% notes due 2015 "more or less unchanged" at 87½ bid, 88½ offered.

At another desk, a source also saw the 10.55% notes unchanged at 85½ bid, 86½ offered. The 9 7/8% notes were quoted at 87½ bid, 88½ offered.

For the fourth quarter, First Data reported a net loss of $369 million, down 89% from a net loss of $3.218 billion in the previous year.

Consolidated revenue for the quarter was $2.586 billion, up 12% from $2.317 billion in the fourth quarter of 2008.

Additionally, adjusted EBITDA for the quarter was $530 million, down 18% when compared to $645 million in the prior year.

In addition to announcing earnings Thursday, the Greenwood Village, Colo.-based company also announced that its top executive, Michael Capellas, was leaving his position, effective March 31.

Lyondell CAM heads up

LyondellBasell's pre-petition CAM headed higher during Friday's trading session as news emerged that its subsidiary, Lyondell Chemical Co., will be coming to market shortly with a proposed exit financing credit facility, according to a trader.

The CAM "with rights" was quoted by the trader at 73 bid, 74 offered, up from Thursday's closing levels of 72 bid, 73 offered.

"After a fairly active week in the name, it was pretty quiet," added a distressed debt trader, speaking of the chemical maker's bonds. The trader placed the 7 5/8% notes due 2026 around 38, essentially steady.

On Friday morning, word got around that LyondellBasell's subsidiary, Lyondell Chemical, has scheduled a bank meeting for Monday with a 10 a.m. ET registration time and a 10:30 a.m. ET start time to kick off syndication on a proposed $2.75 billion exit financing credit facility.

Tranching on the deal comprised a $1 billion six-year senior secured term loan B and a $1.75 billion ABL revolver, with price talk not yet available.

UBS, Bank of America, Barclays, Citigroup, Credit Suisse, Deutsche Bank, JPMorgan, Morgan Stanley and Wells Fargo are the joint bookrunners on Lyondell Chemical's term loan B, with UBS the left lead.

Citigroup is the left lead on the ABL revolver.

Lyondell loan terms

Covenants under the term loan B include a maximum first-lien leverage ratio and a minimum interest coverage ratio.

Security for the term loan B will be a first priority lien on substantially all of the issuer's and each subsidiary guarantors existing future property and assets other than the assets securing the U.S. ABL revolver, 100% of the capital stock of each U.S. subsidiary, 65% of the capital stock of LyondellBasell Subholdings BV and a second priority lien on the assets that secure the U.S. ABL revolver.

Commitments toward the term loan B are due late in the week of March 22, the source added.

Also as part of its exit plan, Lyondell Chemical is going to approach the high-yield market later this month with $2.25 billion of 71/2-year senior secured notes, will get a new European securitization facility and plans to do a $2.8 billion rights offering.

The company has entered into an equity commitment agreement with Apollo Management VII LP, Access Industries and Ares Corporate Opportunities Fund III LP to backstop the equity rights offering by purchasing any shares of common stock left over by senior creditors.

Proceeds from the new financing will be used to help repay and replace the company's existing debt upon emergence from bankruptcy, including its debtor-in-possession facilities and an existing European securitization facility.

The hearing to confirm the company's plan of reorganization will begin on April 23.

Lyondell is a U.S. subsidiary of LyondellBasell Industries AF SCA, a Netherlands-based polymer, petrochemicals and fuels company.

Broad market holds its own

Elsewhere in distressed debt territory, General motors Corp.'s 8 3/8% notes due 2033 were "better," a trader said, ending around 33.

Energy Future Holdings Corp. - more commonly referred to by its former moniker, TXU - saw its bonds hanging in there. A trader pegged the 10 7/8% notes due 2017 at 80 ¼ and the 6 ½% notes due 2024 at 531/2.

But while the rest of the market was holding its ground, U.S. Concrete Inc.'s 8 3/8% notes due 204 were seen slipping half a point to levels around 57, according to a source.

Sara Rosenberg contributed to this article.

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