First Data debt firms; Anadarko still improving; Blockbuster steady; Clear Channel gains

By Stephanie N. Rotondo and Paul Deckelman

Portland, Ore., July 6 - The distressed debt market turned positive in the first trading day after the holiday weekend, paring some of the losses incurred last week.

Still, market sources noted that some players were still out celebrating, making for a "pretty low volume day," a trader said.

Among financial-related credits, First Data Corp. bonds moved up at least a point on the day following comments made by a company spokesperson regarding its ability to service its debt.

Anadarko Petroleum Corp. remained one of the top trading credits, as per the usual these days. The bonds were seen gaining as much as 2 points on the day, even after the market learned that BP plc had asked the company to help cover some of the costs associated with the Gulf of Mexico cleanup effort.

Meanwhile, Blockbuster Inc.'s debt was holding its ground. There has been little movement pricewise in the debt and not even the recent missed coupon payment changed that.

Clear Channel Communications Inc.'s notes finished the day unchanged to better, depending on the issue. There was no news out to prompt the move.

First Data firms

A trader said that First Data's bonds "moved a little bit," with its 9 7/8% notes due 2015 "pretty active earlier on this morning," before ending in a 76-76½ context, which he called up perhaps ½ point from Friday's levels, on "decent volume."

A market source at another desk, seeing the bonds around 761/2, pronounced them up 1½ points.

"A lot of First Data traded," yet another participant said, "but then they always trade a lot." He also saw the 9 7/8% notes in a 76-76¾ range, versus 75-75¾ on Thursday," so they were up close to a point."

A company spokesman was quoted by The Wall Street Journal as saying that the Atlanta-based electronic transaction processor could tap the junk market for funds today if it wanted to take out some of the $15 billion of debt coming due by 2014 which the company racked up as buyout financing when it was taken private in 2007 by Kohlberg Kravis & Roberts.

The paper quoted company spokesman Chip Swearngan as saying that First Data has enough cash on hand to manage its debt, and is "comfortable" with its capital structure."

Also in the financial realm, a trader said that CIT Group Inc.'s 7% notes due 2017 was "one of the more active names on the day," seeing the bonds up about ½ point at 92½ bid, 92¾ offered, although there was "nothing too dramatic" about its movement.

Another trader said the New York-based commercial lender's bonds were quoted "a little higher on the longer end," seeing the paper around a 92-92½ range, which he called probably up ½ point to a full point.

However, he saw the company's shorter bonds, like its 7% notes due 2013, unchanged at 96 bid.

Anadarko still improving

Anadarko Petroleum continued to be a dominant trader, even in Tuesday's lackluster session, a trader said.

The trader said the bonds were "up 1 to 2 points" generally speaking, seeing the benchmark 5.95% notes due 2016 inching up over a point to 883/4.

The trader also said that BP - Anadarko's joint operating partner at the Deepwater Horizon rig in the Gulf of Mexico - was better, pegging the 4¾% notes due 2019 at 88 and the 3 7/8% notes due 2015 at 871/4.

Another trader also saw Anadarko's debt moving up, though "not in all that much size." He also placed the 5.95% notes around 88.

And the trader saw BP's 5¼% notes due 2013 gaining a point to end at 95 bid, 96 offered.

BP has reportedly asked Anadarko, which owns a 25% stake in the sunken oil rig, to help out with costs associated with the clean up effort. The bill thus far to Anadarko is $272 million, according to news reports. BP has already paid out over $3 billion.

Under the terms of Anadarko's agreement with BP, The Woodlands, Texas-based company could be on the hook for a quarter of all costs, unless it could be proven that BP was negligent. In a statement released in mid-June, Anadarko alleged that the April 20 explosion was "the direct result of BP's reckless decisions and actions," thus negating the need for Anadarko to pitch in any cash.

Also, Anadarko said Tuesday that its remaining Gulf operations were "continuing as normal" despite the threat of tropical storms. That announcement came as trading in the company's stock was briefly halted due to new "circuit breaker" rules.

Blockbuster remains steady

Blockbuster's 9% notes due 2012 were "still" around 9 bid, 10 offered, according to a trader.

The bonds have been holding around that level for some time and were not even much changed by news last week that the company had decided to skip the July 1 coupon on its 11¾% notes due 2014.

The Dallas-based movie rental chain managed to secure forbearance from noteholders, giving it until Aug. 13 to remedy the missed payment. Also, according to the terms of the agreement, Blockbuster must hire a restructuring officer.

A Dallas Business Journal article quoted a company representative as saying that bankruptcy is still an option.

"That's been one of the contingencies that we have to prepare for," said Rod McDonald, secretary and general counsel, in the article. "We are optimistic about other opportunities, but we can't afford not to be prepared."

Clear Channel gains with market

Clear Channel Communications' debt closed out Tuesday's session unchanged to better depending on the issue, traders reported.

One trader called the 5½% notes due 2014 "basically unchanged, but somewhat active" at 551/2. Another trader said the 11% notes due 2016 were "better by about a point."

There was no news out on the San Antonio-based multimedia company, and hasn't been since the June 23 announcement that the company's chief executive had resigned.

Broad market moves up

The broad marketplace had a firm tone to it Tuesday, if certain benchmark distressed issues were any indication.

General Motors Corp.'s 8 3/8% notes due 2033, for instance, were better around "32-ish," a trader said.

The trader also saw Washington Mutual Inc.'s bank seniors, such as the 5.55% notes due 2010, closing a "touch better" around 431/4.

Harrah's Entertainment Inc.'s 10% notes due 2018 also ended higher at 813/4.

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