NewPage holds investor focus, bonds slip; Nortel inches higher post-earnings; Caesars declines

By Stephanie N. Rotondo

Portland, Ore, May 23 - European debt concerns not only rocked the equity markets, but also caused problems for the distressed debt markets, traders reported Monday.

"You've got some macro factors of a global nature that are really taking away from what is going on in the distressed world," a trader said.

Additionally, more expected new issues continue to turn the focus to the high-yield arena.

"It's the same old names," said another trader, noting that NewPage Corp. continued to make up the bulk of activity in the distressed space. The bonds have been trading actively - and mostly downward, with a few exceptions - since the company's earnings release on May 12.

Elsewhere, Nortel Networks Corp. saw a bit of action after posting its first-quarter results. The numbers were impacted by the fact that the bankrupt company has sold off nearly all of its assets.

And, Caesars Entertainment Corp.'s debt traded off, following word the company had secured an amend-and-extend on Friday.

NewPage still number one

A trader said that "most of the messages coming across were people dabbling in NewPage."

The Miamisburg, Ohio-based coated papermaker has seen its bonds dominate trading in the distressed sphere for nearly two weeks since reporting earnings on May 12. The disappointing results called the company's refinancing options into question, as NewPage has to refinance or repurchase its 10% notes due 2012 by Jan. 31 or else the maturity on its 11 3/8% notes due December 2014 is accelerated to March 2012.

The trader said the 11 3/8% notes opened lower at 951/2, but managed to rally back to close at 96 bid, 97 offered.

The 10% notes hit a low around 40 before coming back to 41, down 1 to 2 points on the day.

Another trader said the 10% notes were "down a couple points" to the 41 level.

Another trader said that other paper-company names, including Edmonton, Alta-based Millar Western Forest Products Ltd. and Richmond, B.C.-based Catalyst Paper Corp. were "also weaker in sympathy."

Another trader saw the Catalyst 7 3/8% notes due 2014 staying around a 55-57 range, which he said was "about where they were on Friday." But he said the issue was "really, just quoted, no real trades in that, but the quote was still 55-57, where they ended up on Friday, but on no real activity."

Nortel inches higher

Nortel Networks' 10 1/8% notes due 2013 and its 10 ¾% notes due 2016 saw a bit of action after the company reported its first-quarter results, according to a trader.

The trader called the paper up slightly around 92 7/8.

The Toronto-based telecommunications company is currently attempting to wind down its business after filing for bankruptcy in 2009. Since filing for Chapter 11 protections, Nortel has sold "all of its businesses generating approximately $3.2 billion in net proceeds for the benefit of its creditors, and preserving 16,000 jobs for employees with the purchasers of the businesses," the company said in a press release.

Because of the sale of virtually all of its units, Nortel's results were negatively impacted. Revenues dropped to $20 million from $362 million the year before. Net loss came to $105 million, down from net profit of $355 million in the first quarter of 2010.

Caesars debt dips

Las Vegas-casino operator Caesars Entertainment secured an amend-and-extend agreement from lenders, the company announced Friday.

However, by Monday, the weakening marketplace put pressure on the bonds, according to traders.

One market source called the 10% notes due 2018 a point lower at 93½ bid, while another placed the issue around 93.

A third source quoted the notes at 93 bid, 93½ offered, down 1 to 2 points.

"A majority of lenders consented to the amendment," Caesars said in a press release Friday. The amendment on the company's senior secured credit agreement pushed out the maturity of about $800 million in loans from 2015 to 2018 and converted about $425 million of its revolving credit facility to a term loan due 2018.

The company now has "no major maturities" until 2015, the company said.

Paul Deckelman contributed to this article

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