Calpine bank debt firmer, bonds bounce around; Refco bonds jump on asset list release

By Paul Deckelman and Sara Rosenberg

New York, Dec. 6 - Calpine Corp.'s second-lien bank debt was seen on the rebound Tuesday after having suffered a slight dip Monday, traders in that market said.

Meanwhile bond traders observed the troubled San Jose, Calif.-based power company's notes gyrating around before ending mostly unchanged to lower.

The bonds of bankrupt Refco Inc. were quoted as having firmed smartly - up six to seven points on the session - after the New York-based financial services company released a listing of its assets, which could give some indication of what creditors might recover from its reorganization, even though the company cautioned against directly inferring any such valuations.

Calpine's second-lien bank debt basically rebounded to last week's closing levels, moving back up to 78 bid, 80 offered on Tuesday after a relatively small drop on Monday to 77.5 bid, 79 offered, according to a loan trader.

On the bond side of the equation, Calpine "took a little breather," a trader said, "moving up initially one point before settling in around [Monday's] closing levels.

He saw its 10½% notes due 2006 ending the day at 37 bid, 39 offered, its 8½% notes due 2008 at 26 bid, 27 offered, and its 8½% notes due 2011 at 21.5 bid, 22.5 offered, all unchanged.

"They were up earlier in the day by a point," he said, but gave just about all of it back. Maybe the short covering rally [that had propped up the company's unsecured bonds over the past session or two] is over."

A market source at another desk saw the company's secured 8½% notes due 2010 off half a point at 75.5.

Yet another trader saw Calpine's bonds down 2½ points on the session "on continued volatility."

He quoted its 2008s at 25.5 bid, 26.5 offered.

However, an observer at another shop saw Calpine firmer on the day, with its 8¾% notes due 2007 up better than three points on the session at 38.5

Attorneys for disgruntled Calpine bondholders, who had been battling in the Delaware Court of Chancery over the legality of Calpine's use of $313 million of asset-sale proceeds money to buy gas for its power plant, are appealing the court's ruling allowing Calpine until Jan. 22 to pay back that money into an escrow account.

Those bondholders, and the trustee for their bonds, Wilmington Trust Co., had demanded immediate repayment of the money. In their appeal, they noted the increased chance of Calpine's insolvency and a possible bankruptcy filing, contending that the six-week delay would put their interests at risk.

Calpine - which is also appealing court vice chancellor Leo Strine's ruling, though for drastically different reasons - had offered to pay back $199 million of the money in 90 days, or by early March. In its appeal, the company said that the shorter deadline would have a "profound impact" on its already shaky finances.

Mirant steady

From that same merchant power sector, Mirant Corp.'s 2003 bank debt was quoted in the 113 area, according to traders. On Monday, the bankrupt Atlanta-based company's paper was being quoted at 113 bid, 114 offered.

Its bonds were meantime seen pretty much unchanged on the day, with its 7.90% notes due 2009 seen around 126-127 bid and its 7.40% notes that were to have come due last year, about a point below that.

Mirant's bonds and bank debt have recently risen, following the approval by the bankruptcy court overseeing its reorganization of the company's restructuring plan.

Winn-Dixie higher

Apart from that, a trader saw Winn-Dixie Stores Inc.'s 8 7/8% notes due 2008 two points better at 73 bid, 74 offered, although he had seen no fresh news out about the bankrupt Jacksonville, Fla.-based supermarket chain.

Refco gains

Elsewhere, Refco.'s bonds "opened on a strong tone," a trader said, following the overnight news that the troubled commodities brokerage company had complied with a bankruptcy court order to list schedules of certain assets, client accounts and balances from its unregulated Refco Capital Markets Ltd. unit.

He saw the company's 9% notes due 2012 up 6½ points at the outset, and holding onto those gains throughout the session to go home at 77 bid, 79 offered.

At another desk, a trader saw those bonds as high as 78 bid, 78.75 offered, well up from recent levels at 71.75 bid, 72.5 offered.

"It looked like Refco was up a lot," a third market source said, pegging the bonds at 76 bid, up from 71.75.

Refco released schedules listing some $1.91 billion in stocks, bonds and cash that may be related to client accounts, valued as of Nov. 18. The schedules list $3.68 billion in client accounts and exclude other Refco Capital Markets assets, such as claims against clients, securities and other Refco units.

Refco cautioned that the schedules should not be interpreted as the amount that Refco Capital Markets clients may recover in its current bankruptcy case or other proceedings.

Separately, ousted Refco chairman Phillip R. Bennett has consented to maintaining a freeze on more than $100 million in assets that he received from the sale of stock in the company's initial public offering in August.

A court order made public Monday said that Bennett had agreed to "an indefinite extension" that keeps in place a freeze on assets he received from Refco's initial public offering this past summer, when Bennett sold more than 5.3 million shares as part of the company's equity financing.

Refco's house of cards began to collapse several weeks after that IPO, on revelations that over $400 million of trading losses had been transferred on paper to a private company he controlled and had thus been buried deep in the books and kept from potential shareholders, apparently so as not to impact the success of the IPO. That caused federal regulators to look into the cooked books, leading to Bennett's ouster from the company and his later indictment on securities fraud charges. After numerous clients began pulling their money out of the company, Refco filed for Chapter 11 in October, and last month sold the assets of its regulated Refco LLC regulated brokerage business - which was not a part of the bankruptcy filing - to UK-based Man Group, the world's largest publicly traded hedge fund company, for $282 million.

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