Clear Channel notes stay strong; Lyondell files plan, bonds slide; Ahern shakes off downgrade

By Stephanie N. Rotondo

Portland, Ore., Dec. 14 - The distressed debt market continued to be dominated by Clear Channel Communications Inc. Monday, as official word of a new issue propelled the bonds further upward.

Traders saw the bonds up as much as 5 points on the day, in active trading. The media company confirmed last week that it was planning a new issue to pay some upcoming maturities.

Meanwhile, Lyondell Chemical Worldwide Inc.'s notes dropped about 10 points, according to market sources. The heavy declines came as the company filed an amended plan of reorganization and said that it was still considering a previously reported bid to buy the company.

Ahern Rentals Inc. and Smurfit-Stone Container Corp. both had negative news out Monday. But both companies bonds held their ground, ending the day unchanged.

As per usual on Mondays, the market was "pretty subdued," a trader said.

Another said there was definite firmness, but overall things were "pretty quiet."

Clear Channel remains strong

Clear Channel Communications' bonds continued to gain momentum on the first trading day of the week, following confirmation form the company last week of a planned new issue.

A trader said about $50 million of the 11% notes due 2016 traded "up a little bit" at 66 bid, 67 offered.

At another desk, the 11% notes were seen at 68 bid, 69 offered, up 4 to 5 points on the day. The source also saw the 10¾% notes due 2016 at 75.5 bid, 77.5 offered and the 5¼% notes due 2014 at 63 bid, 64 offered.

Yet another source deemed the debt up 3 to 4 points, pegging the 11% notes at 66.5 bid, 67.75 offered and the 10¾% notes at 75 bid, 76 offered.

Late last week, Clear Channel confirmed rumors of a new issue. The chatter had been going on for some time and had resulted in a decent run-up in the bonds.

The $750 million new senior unsecured notes due 2017 were given a B1 rating by Moody's Investors Service. Some market players are expecting the deal to be upsized to $1 billion, still well off from the original expectation of $2.5 billion.

The proceeds from the new issue will be used to prepay a portion of an inter-company note coming due in August.

In other Clear Channel news, the San Antonio-based multimedia company announced that it had named Tom Casey as its chief financial officer. Casey starts in his new position on Jan. 1.

Lyondell files plan, bonds slide

While Clear Channel was the day's clear winner, it was Lyondell Chemical that made the biggest loser's list.

A trader said the 10¼% notes due 2010 traded in a 79 to 81 range, which he thought was down.

"I thought I saw a 90 bid, without [offers], in the Street last week," he said. He added that the last round-lot trades were between 87 and 88.

Another market source quoted the 10¼% notes at 79 bid, 80 offered, down as much as 10 points. The 9.80% notes due 2020 were also weaker at 77 bid, 78 offered.

On Monday, Lyondell said it had filed a reorganization plan with the bankruptcy court overseeing its case. Under the amended terms of the plan, lenders holding the company's $8 billion debtor-in-possession loan would be paid in full. Holders of about $4.9 billion in claims will receive cash, while holders of the $3.25 billion in roll-up claims will get new third-lien notes.

Lyondell also said it was considering a recent unsolicited bid from Reliance Industries. Reliance is offering up to $12 billion for a controlling stake in LyondellBasell.

Lyondell is a Netherlands-based producer of polymers and other chemicals.

Ahern shakes off downgrade

Ahern Rentals' 9¼% notes due 2013 seemed little affected by news of a rating downgrade, traders reported.

One trader said, "Only odd-lots" traded during Monday's session, around 53 bid, without offers.

"The bonds have been kind of around there," the trader said.

Another source saw the notes at 55, unchanged in light trading.

Moody's cut its probability-of-default rating on the Las Vegas-based equipment rental company to Caa3 from Caa2 and the bonds to Ca from Caa3.

The agency said the rating drop was due to a debt exchange, which was announced Dec. 7.

Standard & Poor's also dropped its rating on Ahern to CCC+ from B.

Smurfit unfazed by mill closures

Smurfit-Stone Container also shrugged off negative news, leaving its bonds to end the day unchanged.

A source saw the 8¼% notes due 2012 at 88.5 bid, while another placed the issue at 88 bid. However, the second source said there was "very light trading" in the credit.

The bankrupt Chicago-based paperboard manufacturer said Monday it would permanently shutter two of its mills, which employ a total of 599 people.

"These decisions were made to ensure the company's long-term growth and profitability and do not reflect on the hard work and commitment of the employees at the Ontonagon and Missoula mills," said Steve Klinger, president and chief operating officer, in a press release. "We recognize that closing facilities is always difficult on our employees, their families and the communities, and we will work with our employees, union representatives and public officials during these transitions."

Nakheel paper spikes up

Dubai property development company Nakheel PJSC's bonds zoomed on the news that Dubai's Persian Gulf neighbor, Abu Dhabi, is providing the embattled emirate with $10 billion, which will allow it to pay off the $3.52 billion of 3.172% sukuk bonds slated to come due during this session, a trader said.

"They're getting paid off," he said of those bonds, "so now the other ones are up 30 points," referring to the floating-rate notes due 2010 and the 2¾% notes due 2011, which he quoted in a 62-64 range.

A market source at another desk said those bonds got as good as 67.5 - well up from levels around 36 bid, 39 offered on Friday - while the 3.172s jumped from Friday's close at 53 to 109 on Monday - just a touch below where those bonds had been trading before Dubai announced to the world back on Nov. 25 that its state-run Dubai World development conglomerate, Nakheel's corporate parent, would ask its creditors for a "standstill" that would it allow it to delay repayment on a portion of its $59 billion of debt while it tried to restructure that debt. That sent the 3.172s eventually cascading down over several subsequent sessions as far as the 42 bid level, while the floaters and the 2¾% notes eventually plunged into the upper-20s from prior pre-news levels in the 80s.

The first trader said it was impossible to estimate the activity level in the bonds because "they're eurobonds, so they don't have to Trace, but I would think they did trade because they were quoted as being active."

He agreed with the general proposition that there's nothing like having a savior - in this case, Abu Dhabi - rising to the company's rescue, "as long as you weren't one of the guys who [went] short" on the paper.

Broad market firm

Elsewhere in the distressed debt market, a trader saw U.S. Concrete Inc.'s 8 3/8% notes due 2014 "trading up" to 57.25 bid, 57.5 offered.

"Seems to be better bid for," he said, adding that the company had filed an 8-K with the Securities and Exchange Commission.

Paul Deckelman contributed to this article.

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