Loral bonds up on PanAmSat contract; McLeodUSA bank debt settles in

By Paul Deckelman and Sara Rosenberg

New York, Feb. 23 - Bonds of Loral Space & Communications Ltd. were orbiting at higher altitudes Wednesday after PanAmSat Corp. tapped the reorganizing New York based satellite company's Space Systems/Loral subsidiary to build its next satellite.

In bank debt dealings, McLeodUSA Inc.'s paper seemed to have settled in on Wednesday, traders said, bringing some measure of certainty to an issue which had gyrated at lower levels following a lender call last week.

Loral's Orion 10% notes due 2006 were seen by one market source to have climbed to 75.5 bid, up 2½ points on the session, although he said that the parent company's 9½% notes due 2006 were unchanged at 25.25.

A trader in distressed issues was a little more conservative in estimating where the bonds were, seeing the Orion 10s at 74 bid, 76 offered and the Loral Space 91/2s at 24 bid, 26 offered, both up two points on the day.

Loral said that its Palo Alto, Calif.-based unit, Space Systems/Loral had been tapped by PanAmSat to build its new Galaxy 18 satellite.

No pricetag was announced on the satellite, which should be delivered to PanAmSat, a Wilton, Conn;-provider of satellite communications services, in 2007.

In bank debt dealings, McLeod's paper was seen Wednesday finding new levels of 36 bid, 39 offered, according to a trader who explained that since the Cedar Rapids, Iowa-based telecommunications services provider held a private lender call last week, investors haven't been quite sure where to quote the paper.

"People are concerned about the numbers and losing Forstmann," the trader said. Forstmann Little currently owns a controlling interest in McLeod.

Following the lender call last Wednesday, McLeod's bank debt fell to 38 bid, 42 offered from previously wide levels of 40 bid, 47 offered. However, since then, the paper has not really been quoted in the secondary market, until now.

Mirant loans edge higher

Meanwhile, Mirant Corp.'s bank debt was up "marginally" in Wednesday's session with the '03 and '04 paper trading just north of 73 and the '05 paper trading just north of 80, a trader said.

By the end of the day, the '03 and '04 paper was quoted at 73 bid, 73.5 offered and the '05 paper was quoted at 80 bid, 81 offered, the trader added.

On Tuesday, a different trader had the bankrupt Atlanta-based energy company's '03 paper closing the day at 72.5 bid, 73 offered, but saw trades take place as low as 72.5 and as high as 73 throughout the session.

Winn-Dixie bonds steady, passthroughs higher

Back among the bond investors, traders said that there was no real movement in Winn-Dixie Stores Inc.'s 8 7/8% notes due 2008, which remained anchored in the same range around 56.5 at which they finished Tuesday, after the Jacksonville, Fla.-based supermarket operator sought Chapter 11 protection from its junk bond holders and other creditors. Those bonds are trading flat, or without the accrued interest.

Meanwhile, the company's real-estate secured 8.181% and 7.803% passthrough certificates, which continue to trade with their accrued interest, were seen "up maybe a point," a trader said, quoting the first at 73 bid, 74 offered and the other at 74 bid, 76 offered.

Another trader, though, said that from where he sat, "the passthroughs are the same - but a lot of paper is changing hands at those levels."

Pathmark slips

The trader said that Pathmark Stores Inc.'s 8¾% notes were trading down to about 95 bid, 96 offered from prior levels at 97 bid, 97.5 offered. However, he saw no fresh news that would explain the fall in the Carteret, N.J.-based Northeastern regional supermarket operator's bonds - other than general sector sympathy with Winn-Dixie.

It should be noted, however, that Pathmark is in the process of trying to find a buyer for the company or, absent that, for a major asset sale - a task made harder by would-be investor angst in the wake of Winn-Dixie's fall as well as the likelihood that the latter chain may dump several hundred supermarkets as it attempts to turn itself around, depressing the broad market for Pathmark's for-sale assets.

Elsewhere, Adelphia Communications Inc.'s bonds were seen higher Wednesday, although there was no fresh news out on the bankrupt Greenwood Village, Colo.-based cable operator that would justify a move like that seen in the 10¼% notes due 2016, which a market source quoted as being up 3¼ points at 88.75. He also saw the company's 8 1/8% notes due 2003 at 84.75 bid up 1¾ points.

However, he saw Adelphia's 7¾% notes due 2009 and 7 7/8% notes due 2009 each up only ¼ point on the day at 85.75.

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