Gaming sector takes a hit; Freescale bonds dip on revolver draw; Idearc notes weaker to steady

By Stephanie N. Rotondo

Portland, Ore., Oct. 24 - As the last trading day of the week closed, distressed bond traders reported that there was continued weakness.

"There was some stuff trading," a trader said. "But it's a little bit frozen and nothing was overly active."

The gaming arena took a hit as the sector's stocks experienced significant declines first thing Friday morning. MGM Mirage's bonds were at least 4 points weaker on the day, while Isle of Capri Casinos' bonds dropped as much as 7 points.

Freescale Semiconductors announced that it had drawn down more than half of its revolving credit facility balance in an effort to increase its liquidity position. But investors reacted by sending the company's corporate debt lower.

Meanwhile, Idearc Inc.'s bonds, which have been called one of the more active issues of the week, saw activity die down during trading. Traders called the bonds slightly weaker to unchanged, even as the company's rival R.H. Donnelley Corp. was getting downgraded.

Gaming sector takes a hit

The gaming sector "got beat up," a trader said, following hefty declines in the sector's equity.

MGM Mirage's 8 3/8% notes due 2011 were "down a lot," the trader said, trading between 58 and 62.

"They are not doing too well," he said of the gaming operator. "It looks like somebody was getting out."

Another market source deemed MGM's 6 5/8% notes due 2015 at 62 bid, 4 points softer.

One of the biggest movers in the sector was Isle of Capri, which traders were once again referring to as "Isle of Debris." A trader pegged the 7% notes due 2014 at 45 bid, 49 offered, while another called the debt down 6 to 7 points on the day at 46 bid, 47 offered.

Las Vegas Sands Corp.'s 6 3/8% notes due 2015 headed down about 5 points, closing at 45 bid, 46 offered.

Meanwhile, Wynn Las Vegas LLC's 6 5/8% notes due 2014 were deemed somewhat active and lower around 71.5.

As the stock market opened Friday, gaming sector stocks were seen hitting new all-time lows. Las Vegas Sands' equity fell $1.65, or 20.1%, to $6.56, while MGM's equity managed to pare losses by market close, ending up 35 cents, or 3.23% to $11.20. However, that stock opened around $8.94 and in after-hours trading, fell 81 cents, or 7.21%, to $10.39.

Freescale dips on draw

Freescale Semiconductors' debt traded down during the session on news that the chipmaker had drawn $460 million from its $750 million revolving credit facility. However, one trader said the name was "not a volume leader."

The trader quoted the 8 7/8% notes due 2014 at 45 bid, 45.5 offered. Another trader saw the 10 1/8% notes due 2016 weaker around 41 from "the mid-40s a couple days ago."

Freescale chose to draw down its credit facility in an effort to increase liquidity, according to a press release.

"We made this proactive financial decision to further enhance our liquidity and cash position," said Alan Campbell, senior vice president and chief financial officer. "This improves the company's financial flexibility as we continue to execute our business plans."

As of the end of the third quarter, Freescale has cash and equivalents of $1.3 billion. The credit facility includes a $60 million commitment from now-bankrupt Lehman Commercial Paper Inc. The company said in the release that the "borrowing request was not honored by Lehman Commercial Paper."

Freescale is an Austin, Texas-based designer and manufacturer of embedded semiconductors for the automotive, consumer, industrial, networking and wireless markets.

Idearc weaker to unchanged

Idearc's bonds were unchanged to slightly lower and "not as active as they have been," traders reported.

One trader saw the 8% notes due 2016 essentially unchanged at 18.5 bid, 20.5 offered, while another called the notes down a point around 19.

But despite a downgrade and a revised outlook, sector peer R.H. Donnelley Corp.'s bonds "didn't really move," said a trader, adding that what moves there were fell in a half-point range from the previous day's levels.

Fitch Ratings cut its rating on the phonebook publisher to B from B+ and on the company's senior unsecured notes to CCC+ from B-. Standard & Poor's meanwhile revised its outlook to negative from stable, citing expectations of a decreasing level of EBOTDA coverage, among other things.

The downgrade and outlook revision comes one day after Donnelley posted numbers that beat expectations. The company's bonds had gained about 2 points on the quarterly results, though Idearc's slipped. The latter was blamed on investors' concerns that the company will not be able to turn around as well as Donnelley has thus far been able.

Broad market remains weak

A trader saw Beazer Homes USA Inc.'s 8 5/8% notes due 2011 down 10 points on the session at 61 bid, 65 offered. He said its 8 3/8% notes due 2012 fell 4 points to 59 bid.

In the financial realm, Washington Mutual Inc.'s senior holding company notes - which had fallen sharply on Thursday - were down another 2 points on Friday to 55.5 bid, 57.5 offered.

General Motors Corp.'s 8 3/8% benchmark bonds due 2033 fell a point to 24 bid, 27 offered, while the company's 49%-owned GMAC LLC financing unit's 8% bonds due 2031 were 1.5 points lower at 33 bid, 36 offered. Domestic archrival Ford Motor Co.'s 7.45% bonds due 2031 were also down 1.5 points to 26 bid, 29 offered.

At another desk, a trader saw the GM bonds down 1 point at 22.5 bid, 23.5 offered, though he saw the Ford long bonds actually up half a point at 26.5 bid, 27.5 offered.

Bon-Ton Stores Inc.'s 10¼% notes due 2014 fell 2 points to 15 bid, 15.5 offered on the possibility of a downgrade from Moody's Investors Service.

Paul Deckelman contributed to this article.

© 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.