Tronox notes’ gains halted; Smurfit-Stone paper still heading higher; broad market mixed

By Stephanie N. Rotondo and Paul Deckelman

Portland, Ore., Oct. 16 – Tronox Worldwide LLC was the day’s notable name in the distressed debt market Friday, according to market players.

Sources saw the chemical maker’s notes coming in some, as the company met with bondholders regarding funding of its stand-alone reorganization plan. The declines came after at least 10 days of unexplained gains.

Smurfit-Stone Container Enterprise Corp. also remained a commonly heard name at distressed desks. Like Tronox, Smurfit has been seeing slow and steady gains of late and Friday was no different. Still, with little to no news on the company, it is unclear what has caused the surge.

Tronox gains halted

After spending most of the past week or more on an upward climb, Tronox Worldwide’s bonds came in a little, traders reported.

A trader saw markets for the 9½% notes due 2012 at 64 bid, 67 offered, compared to 64½ bid, 68½ offered previously. However, he added that the “real markets” were “probably a point in on either side.”

Another trader said the issue was actively traded at 64 bid, 65 offered.

“That’s off its highs,” he said, noting that the bonds had traded up as good as 68 on Thursday. “That’s probably off a good point.”

Another trader once again saw “a lot of volume” in Tronox’s notes due 2012 seeing them ending in a 64-65 context, which he said was “down a little bit” on the day, and below the day’s highs around 66-67 reached earlier in the session.

He said the bonds were ending a point lower on the day, “but there was a lot of volume.” As to the factors behind the bankrupt chemical pigments manufacturer’s recent surge – which has lifted those bonds nearly 30 points from the levels in the upper 30s they held pre-news on Oct. 7, when it released positive financial projections – he noted that “their 8-K did come out today, which might have something to do with it.”

A source at another desk saw Tronox’s bonds as being among the most actively traded, with nearly $20 million having moved by mid-afternoon. He quoted the notes at 65½ bid, although that was down from the 66¼ level seen Thursday, when Tronox was also among the busiest issues.

The modest decline came as the company met with holders of the 9½% notes to seek investments in the company’s proposed reorganization plan. The company said it might need to sell equity or raise other capital for its exit funding needs.

Tronox is an Oklahoma City-based manufacturer of titanium dioxide pigment.

Smurfit still heading higher

A trader said that Smurfit-Stone Container’s bonds “had a lot of activity, and moved up to the 84 range,” where he quoted its 8 3/8% notes due 2012, calling them up 3 or 4 points on the day.

He also saw “plenty of volume” in the company’s 8% notes due 2017, which moved up to around 84-85.

He said “they traded both ways” – both around the 84 level and around the 85 level.

The company’s bonds were up much of the week, “and they did a good job rising some more today,” he said.

At another desk, a market source saw Smurfit’s 8¼% notes due 2012 up nearly 2 points, moving above the 82 level. A source saw very active trading in that particular issue around the 82¼ area – almost $30 million having changed hands by mid-afternoon, making it one of the busiest junk issues of the day.

That source also saw the 8s having traded more than $20 million by mid-afternoon, also among the busiest of junkers, and quoted the bonds at just under 83½ bid.

Another trader pegged the debt generically at 83 bid, 84 offered, versus levels around “80-ish” on Thursday.

Broad market mixed

Among other notable distressed credits, trading in CIT Group Inc. has quieted down some, according to a trader. He called the 5.40% notes due 2013 “not much different” around 63.

However, another trader said there was “a lot of CIT activity still,” and that “some of the subordinated notes traded up a bit.” But he did not have specifics on said notes.

A trader saw Visteon Corp.’s bonds continuing to gain, extending the momentum seen on Thursday.

“Visteon did move higher,” he said, quoting the 7% notes due 2014 around 35 bid at its peak level. “There was a lot of volume,” with trades around 34½, before the bonds ended up at 32-33, which he called down a little from Thursday, perhaps about a point.

There was “decent volume in it,” he said.”

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