Swift Transportation paper gains ground; Level 3 boosted; Tribune loan higher after lender call

By Stephanie N. Rotondo

Portland, Ore., June 5 - Swift Transportation Co. Inc.'s debt continued to move upward Thursday, but it was unclear what was driving the gains.

A trader said he thought gains from the previous session were due to declining oil prices. But as oil rose Thursday to close up $6.08 to $128.38 a barrel - eliminating the losses from the two previous trading days - he noted that could not be the case. Instead, he opined that short covering was the culprit.

Meanwhile, upbeat analyst reports from both Goldman Sachs and UBS were given credit for boosting Level 3 Communications Inc.'s bonds and equity. One analyst said, after meeting with company management, that a financing plan is in the works that is likely to please both sides of the capital structure.

Tribune Co. reportedly held a lender call on Thursday. Sources deemed the conference a positive one, as the company's bank debt closed the day higher. In the call, the company discussed the progress on its pending asset sales, including its efforts to unload the Chicago Cubs.

Swift paper gaining ground

Swift Transportation's bonds continued to drive up during Thursday's session, but as is typical in that name, there was no news to ignite the paper.

One trader speculated that it could be short covering that was moving the bonds, quoting the 12½% notes due 2017 at 42.5 bid, 44.5 offered.

"I have not heard a thing but it sure feels like short covering for some reason," he said. "Yesterday I thought it was because oil was down, but that wouldn't be the case today now would it?"

"I bet someone knows something," he added.

At another desk, a trader called the bonds "a little better," the 12½% notes at 39 bid, 41 offered versus Wednesday's levels of 36 bid, 38 offered, and the floating-rate notes due 2015 at 37 bid, compared to 34 bid, 35 offered previously.

Yet another source deemed the debt 1.5 points better, with the 12½% notes ending the day at 41.5 bid. The source said he "hadn't heard anything" that might have sparked the gains.

Swift Transportation is a Phoenix-based trucking company.

Level 3 gains on analyst reports

Positive analyst reports boosted Level 3's paper, as well as its stock, in Thursday trading.

A trader called the bonds about a point better, the 12¼% notes due 2013 at 104.5 bid, 105.5 offered, the 8¾% notes due 2017 at 90.75 bid, 92 offered and the 9¼% notes due 2014 at 94 bid, 95 offered.

Another trader said the 12¼% notes traded as high as 106, while the 8¾% notes ended around 89, calling the paper 1.5 to 2 points better overall.

When asked if the completion of an asset sale had anything to do with the move, the second trader opined that it was more likely the analyst report from Goldman Sachs that did the trick.

"Maybe people are bullish coming out of these meetings," he said, citing the report by Jason Armstrong that came after the analyst met with top executives at Level 3.

Elsewhere, the 8¾% notes were seen up more than 2 points on the day, to 91.5 bid, while the 9¼% notes were also up nearly a deuce, at 96 bid.

In the equity, the stock rose 52 cents, or 13.33%, to $4.42.

In Armstrong's June 4 report, he said that the company was looking to some financing options that would please both equity and debt holders. Armstrong's upbeat proclamation followed another positive report released Tuesday from UBS.

Also in the news, Level 3 announced that it had completed the sale of its advertising distribution business for about $129 million in cash.

Level 3 is a Broomfield, Colo.-based telecommunications provider.

Elsewhere in the sector, Charter Communications Inc.'s CIH debt continues to rally, a trader said. He pegged the 11¾% notes due 2014 around 73 and the 11% notes due 2015 at 87.5, both "up a couple more points" on the day.

Another trader placed the 10% subordinated notes due 2014 at 67.5 bid, 69.5 offered, while its senior 8 3/8% notes due 2014 were at 98.5 bid, 99.5 offered, both up half a point.

Tribune loans buoyed after lender call

Tribune's term loan debt moved into higher territory during market hours as the company held a lender call to discuss first-quarter financial results that were released in May and to provide an update on operations and financial activity, according to a trader.

The Chicago-based media company's term loan B was quoted at 77¼ bid, 77¾ offered, up from 76 bid, 76½ offered on Wednesday, the trader said.

And, the term loan X was quoted at 96½ bid, 97½ offered, up from 95½ bid, 96½ offered, the trader added.

According to a second source, the Tribune call went well, as evidenced by the bank debt's performance.

The company said in the call that last-12-months EBITDA was $1.3 billion or 8.1 times guaranteed debt leverage, versus a maintenance test under the credit facility of 9 times, and liquidity was in excess of $1 billion, the second source remarked.

The company also announced on the call that it has a letter of intent with a leading financial institution for a $250 million commercial paper program.

As for asset sales, the sale of Newsday for $650 million is expected to close in the third quarter, the sale of the Cubs is progressing as books went out to Major League Baseball and are expected to be given to prospective bidders next week, with bids due 30 days afterwards, and talks for the potential sale of the company's 31% stake in the Food Network have occurred with multiple parties.

The source went on to say that Sam Zell, chief executive officer of Tribune, said that future asset sales, including the Cubs and Food Network stake if sold, would be structured in such a way as to minimize taxes.

In addition, Tribune told lenders that it is retooling its newspapers to reduce production and editorial costs.

Furthermore, Tribune said that the capital expenditure budget is now $95 million to $100 million, down from the previously indicated guidance of around $130 million to $150 million.

Although management did not provide guidance on the call, they did indicate that results for March were the softest month of the first quarter due to the timing of Easter, that April results for newspaper publishing operations were better than March and that results had since leveled off, the source added.

Broad market moving upward

Overall, a trader noted, "in general things seemed pretty strong."

Neff Corp.'s 10% notes due 2015 were seen at 45 bid, 47 offered, while Ashtead's 9% notes due 2016 ended the session at 87.5 bid, 88.5 offered and the 8 5/8% notes due 2015 closed at 86.5 bid, 87.5 offered.

"That's about where we thought they were," a trader said. "But that's the first time I have seen them in about two-and-a-half months."

Another source called Neff's 10% notes off nearly half a point to the 45 level.

Meanwhile US Concrete Inc.'s 8 3/8% notes due 2014 moved up to 87 bid from the "low-80s not too long ago," the trader added.

Another trader said Calpine Corp.'s stubs "continue to trade up," finishing the day around 27.

Residential Capital LLC's 6 3/8% notes due 2010 moved higher to 53.5 bid, 54 offered.

Georgia Gulf Corp.'s 10¾% notes due 2016 rose nearly 1.5 points to move above 69 bid.

Harrah's Operating 5¾% notes due 2017 gained a quarter of a point to around 56, while Idearc Inc.'s 8% notes due 2016 were also up that much to the 72 area.

Sara Rosenberg and Paul Deckelman contributed to this article.

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