Nova bonds get 'clocked'; Freescale debt gyrates post-numbers; Nortel paper mixed, Rite Aid better

By Stephanie N. Rotondo

Portland, Ore., Jan. 30 - Nova Chemicals Corp.'s bonds continued to decline during Friday's session following the company's quarterly earnings release on Thursday.

After losing as much as 9 points Thursday, traders saw Nova's debt drop as much as 13 points during the last trading day of the week.

Meanwhile, Freescale Semiconductor Inc.'s debt structure gyrated throughout the session, market sources reported. Both the bank debt and the corporate debt opened the day at lower levels, but managed to rebound some by the end of the day. As such, the debt was deemed unchanged to slightly better.

News that Nortel Networks Ltd. was abandoning its WiMax business did little to affect the bonds. The notes closed the week mixed. Also, Rite Aid Corp.'s bonds traded up following its January sales report Thursday, but traders did not see a lot of action in the name.

As the month came to a close, market players were busier with month-end pricing than with trading, several sources said. Overall, the tone of the distressed world was called largely flat.

"There were not many big trades or price changes, aside from Nova," a trader said.

Nova gets 'clocked'

Nova Chemicals' debt "took it on the chin," a trader said, losing as much as 13 points on the day.

The bonds had lost as much as 9 points on the day on Thursday, following the release of the company's quarterly report. By all accounts, traders saw the trend continuing into Friday's session.

A trader pegged the 7.40% notes coming due in April at 62, versus levels around 75 the day before. Another trader remarked that the issue "got clocked," falling more than 10 points to 62.5, with about $25 million changing hands.

Yet another source called the 6½% notes due 2012 more than 10 points weaker as well, at 29.5 bid.

The Canadian chemical maker posted a loss of $214 million on Thursday, due to weak demand for plastic resins. A 36% decline in sales helped to push the company's bottom line into the red.

Still, the company remained upbeat.

"The company generated strong cash flow, increased its liquidity and reduced debt by $290 million in the quarter despite a large feedstock cost dislocation and low polyethylene order levels in October and November," Jeff Lipton, Nova's chief executive, said in a statement. "Customers ran very low on inventory and polyethylene sales volumes rebounded strongly to the highest level in our history for the month of December, and our second best month ever."

Freescale debt gyrates

Freescale Semiconductor's term loan B started off the day at lower levels on the back of the company's earnings announcement, but then levels ticked back up to end basically unchanged, according to traders.

The term loan B was quoted by one trader late in the day at 51½ bid, 53 offered, up from the morning's opening levels of 48 bid, 50 offered, but not much different from Thursday's levels of 51 bid, 53 offered.

A second trader had the term loan B quoted at 52 bid, 53 offered late in the day, up from a morning bid of 49. This trader said that prior to numbers coming out, the loan was seen at 52½ bid, 54½ offered, but by Thursday night, after numbers were released, the debt had moved to 50½ bid, 52½ offered.

The first trader explained that the initial weakening in term loan B levels was likely caused by the company's not very good earnings, but being that investors were assured that Freescale has plenty of liquidity, the loan regained its footing.

In the bonds, a trader saw about $20 million of the 8 7/8% notes due 2014 trade at 22.5, which he called "maybe a point better, but not materially different." Another trader said the paper "opened lower, but came back" to close at 21 bid, 22 offered.

For the fourth quarter, Freescale reported a net loss of $4 billion, compared with a loss of $3.5 billion in the previous quarter and $525 million in the last year's fourth quarter.

Loss from operations for the quarter was $4.2 billion, compared with a loss of $3.4 billion in the prior quarter and $595 million in the fourth quarter of 2007.

Net sales for the quarter were $940 million, compared with $1.4 billion in the third quarter of 2008 and $1.5 billion in the fourth quarter of 2007.

And, adjusted EBITDA for the fourth quarter was $94 million.

As for the company's financial position, on Dec. 31, 2008, cash, cash equivalents and short-term investments were $1.4 billion, compared with $1.3 billion on Sept. 26, 2008.

"The challenging economic climate significantly impacted our fourth quarter results," Rich Beyer, chairman and chief executive officer, said in a news release. "Despite the current climate, our priorities are clear and achievable. We remain focused on further reducing our break-even point while ensuring we execute on our strategic growth initiatives and leverage our market leadership positions."

On Friday, Fitch Ratings downgraded Freescale to CCC from B.

Freescale is an Austin, Texas-based designer and manufacturer of embedded semiconductors for the transportation, networking and wireless markets.

Nortel mixed, Rite Aid better

Nortel Networks announced late Thursday that it would shutter its WiMax business as it looks to restructure. But the news did not generate a lot of interest, traders reported.

"I didn't see much, certainly no trades of size," a trader said.

Another trader said there was some action in the name - albeit light - and called the floating-rate notes due 2011 about a point lower around 16. But another source deemed that issue more than a point better at 16.5 bid, 17.5 offered.

Meanwhile, Rite Aid paper was seen rallying following the company's same-store sales numbers Thursday. But, once again, traders noted that volume was thin.

A trader quoted the 9½% notes due 2017 and the 9 3/8% notes due 2015 at 28 bid, 29 offered, calling that better by 1 to 2 points. Another trader pegged the 9½% notes at 30 bid, 31 offered, the 7½% notes due 2017 at 58 bid, 59 offered and the 10 3/8% notes due 2016 at 66 bid, 67 offered.

Rite Aid's January sales grew by 1%, boosted by its name brand pharmacy sales. Total sales fell 0.9% to $1.98 billion from $2 billion.

Broad market stable

Sprint Nextel Corp.'s 7 5/8% notes due 2011 closed at 83 bid, 84 offered, unchanged, a trader said. He added that about $17 million of the debt traded.

The trader also saw $25 million of Wynn Las Vegas LLC's 6 5/8% notes due 2014 trade around 73.

Sara Rosenberg contributed to this article.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.