General Growth gains on numbers; Clear Channel moves higher; Leap Wireless debt remains active

By Stephanie N. Rotondo

Portland, Ore., Nov. 6 - Activity in the distressed debt market remained muted Friday, made worse by a celebratory parade by the New York Yankees down the streets of the city, traders reported.

Still, the market seemed to finish the week somewhat firm, or at least sideways.

General Growth Properties Inc.'s notes moved higher in trading, following the release the company's third-quarter numbers. One trader said that while most trades he saw in the name were small, investors were "sniffing around."

Meanwhile, Clear Channel Communications Inc. saw its bonds improving, as well. There was no news to explain the move or the amount of trading volume.

Leap Wireless International Inc.'s debt also continued to trade actively, just one day after the company reported its quarterly results. However, traders noted that the bonds ended essentially unchanged.

General Growth gains post-numbers

General Growth Properties gained some ground in Friday trading after the bankrupt company reported its third-quarter results.

One trader said the 8% notes due 2009 "traded up" to a high of 91.75, calling that "up a good point or so."

But another source said that only "little scraps" were trading in the name, though he added there were "definitely people sniffing around."

The second trader quoted the 3.98% convertible notes due 2027 at 74 bid, 75 offered and the Rouse Co. LP-linked 6¾% notes due 2013 at 89 bid, 90 offered.

He also saw the company's term loan around 82.

For the third quarter ending Sept. 30, General Growth saw its operating income decline to $201.21 million, compared with $257.67 million the year before. Total revenues also fell, coming to $760.96 million, versus $814.7 million in the third quarter of 2008.

Net loss was $117.43 million. That compared with a loss of just $22.26 million the previous year.

"Although comparable and total tenant sales on a trailing 12-month basis continue to be down, third quarter 2009 comparable tenant sales were only down 4.6% as compared to the third quarter 2008," stated Adam Metz, chief executive officer, in the earnings release. "September 2009 comparable tenant sales actually increased 0.8% as compared to September 2008 comparable tenant sales.

"While we are hopeful these trends will continue, our outlook remains cautious for the upcoming holiday season," Metz added.

General Growth Properties is a Chicago-based real estate investment trust.

Clear Channel moves higher

Clear Channel Communications' bonds traded actively and better, traders reported.

A trader called the credit "up a couple points," the 11% notes due 2016 trading around 44, compared with 40 bid, 41 offered previously.

Another source pegged the 5½% notes due 2014 at 38 bid, 39 offered, up 1 to 2 points.

Yet a trader saw Clear Channel's 11% notes fairly active in a 43 to 45 context.

"A bunch of paper is trading" in that area he said, "a good amount," at 43 to 44 at the end of the day.

Another market source, who saw the bonds around 44, said that more than $20 million had changed hands, according to the Trace bond-tracking system, making it one of the day's more active junk issues.

There was no fresh news to explain the movement in the name. On Thursday, the company said it would release its third-quarter results after the market closes on Nov. 9.

No conference call was scheduled to discus the results.

Clear Channel Communications is a San Antonio-based media and entertainment company.

Leap still busy, unchanged

Leap Wireless International's bonds remained among the most active traders, one day after the company posted its quarterly report.

A trader said about $60 million to $70 million of the 9 3/8% notes due 2014 linked to Cricket Communications Inc. traded. However, they were unchanged around 95.25.

San Diego-based Leap reported revenues of nearly $600 million for the third quarter. That was up 20.7% year-over-year, but down from market estimates of $619.7 million.

Net loss was $65.4 million, or 85 cents per share, compared with a loss of $47.3 million, or 72 cents per share, in the third quarter of 2008.

"The company delivered solid financial performance in what is seasonally our most challenging quarter, as reflected in our 25% year-over-year growth in adjusted OIBDA and 35% year-over-year increase in total customers," said Doug Hutcheson, president and CEO, in a statement published Thursday.

"We also delivered these results in the midst of an increasingly competitive landscape in the pre-paid wireless space as well as a turbulent economic environment, which included rising unemployment and reduced discretionary income in our key demographic segments. The competitive and economic environment contributed to the year-over-year increase in churn in our existing markets which affected net customer additions."

Broad market remains steady

In the broader marketplace, a trader said that CIT Group Inc. "is done" as far as any kind of real moves or volumes, now that most of the bonds have converged in the high-60s.

"They're quoted 68-69, and everybody's just waiting for the new paper to come out," he said. He added that "they're still trading" but it was not actively quoted.

Catalyst Paper Corp.'s 8 5/8% notes due 2011 "were pretty much unchanged," according to a trader, though he saw them actively traded again. He pegged them in the high-50s, around 58.5 to 59.5, on "good volume."

Another trader, who noted that the paper had fallen earlier in the week to as low as 57.5 on bearish guidance from the company and lackluster results, said that it had traded back up on Friday, up half a point to 58.5 bid, 59.5 offered.

He also saw its 7¾% notes due 2014, which had fallen as low as 48.75 bid at mid-week, were "up 1 or 2" points Friday to 50.5 bid.

Also, U.S. Freightways' 8½% notes due 2010 remain parked around the 70 level, which a trader called "pretty much unchanged. I did not see a lot of activity at all."

He said the last trade of the day had gone off at 71.5, in that same region where the bonds had already been.

Tronox Worldwide LLC's bonds were seen "right around" the same 63ish level they have been at already, although he said the last trade he saw as at 63.75.

Paul Deckelman contributed to this article.

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