Idearc quiets down, ends mixed; Seitel notes hold steady; Nortel bonds move up, settle back in

By Stephanie N. Rotondo and Sara Rosenberg

Portland, Ore., Aug. 28 - The distressed debt market went out with a whimper Friday, as activity continued to lag, though, overall, traders said things ended mostly positive.

"The market seemed to be better in the morning, but it quieted down fast," said one market source.

Idearc Inc. saw its bonds quiet down some, after several sessions of making the most active list. And the bonds gave back some of the gains incurred the day before.

Meanwhile, Seitel Inc.'s debt held steady, even as the company said it canceled an undrawn credit facility. It was unclear why the company closed down the facility.

Nortel Networks Corp. gyrated throughout the session, moving higher before settling back down around opening levels. News out Friday showed that the bankrupt company had a hefty tax bill outstanding, though the company refuted the "magnitude" of the claim.

Idearc quieter, ends mixed

After making the most active list for several straight sessions - for no particular reason, at that - Idearc quieted down some and even lost some of the gains it had posted in the previous session.

A trader said there were some "early trades" in the 8% notes due 2016 between 8.7 and 9.5, which was down from levels near 10 on Thursday. Still, the trader said that the name was "quiet," with very little going on in the street.

"Whoever is trading them is keeping it quiet," he said.

Another trader, however, said there was "a fair amount of trading" in the bonds during the morning. He saw the notes slip from a mid-9 range to a mid-8 range on the day.

Idearc's term loan B, meanwhile, stabilized on Friday after experiencing a drop and then a slight rebound on Thursday in response to the company holding a private lender call, according to traders.

The term loan B was quoted by one trader at 46 bid, 46¾ offered, compared with 46 bid, 47 offered at the end of the day Thursday. The debt had hit a low of 43½ bid, 45½ offered on Thursday, the trader added, and had closed out on Wednesday at 49 7/8 bid, 50¼ offered.

A second trader, however, had the term loan B a little higher on the day, putting levels at 46¼ bid, 47¼ offered, versus 45¾ bid, 46¾ offered at the close on Thursday. This trader said the loan hit a low of 44½ bid, 46½ offered on Thursday and closed out on Wednesday at 49¼ bid, 50 offered.

"Still have no idea what [Thursday's] lender call was about but [the loan] seems to be rebounding a little," the second trader remarked.

Traders have been reporting that Idearc's debt had been trading rather actively, though it was unclear what had caused the sudden interest in the phonebook publisher. The bankrupt company was slated to ask the judge overseeing its case for permission to send out its reorganization plan to creditors on Wednesday.

Under the terms of the plan, Idearc's lenders will receive the bulk of new equity in the company. However, bondholders have fought the plan, calling it "skewed" toward that particular group.

Seitel notes hold steady

Seismic data collector Seitel saw its debt hanging in there or falling some, depending on whom you asked, as the company canceled a credit facility with Wells Fargo Foothill.

One trader said the 9¾% notes due 2016 were "just hanging out" around 60. Another source saw the bonds steady to slightly lower at 58 bid, 60 offered.

The company did not disclose in its regulatory filing the reason for canceling the loan agreement, nor did the company return calls seeking comment Friday.

There were no amounts outstanding under the facility.

Nortel up, down on IRS news

Nortel Networks' bonds moved up during the session, only to come back down around opening levels.

One trader placed the 10 1/8% notes due 2013 at 45.5 bid, 46.5 offered early on in the day, before heading up to around 48 bid, 48.5 offered.

Another source saw the notes following that same path, but then saw them coming back down to the 46 bid, 47 offered mark by the end of business.

On Thursday, several news outlets reported that the bankrupt telecommunications company had been hit with a $3 billion claim against it from the Internal Revenue Service.

"We have significant tax loss carry-forwards in the U.S., the size of which have been subject to review by the IRS, however, we are not aware of anything that would lead to a tax liability of that magnitude," said Nortel spokesman Jay Barta, according to a Bloomberg article.

Nortel filed for bankruptcy back in January, listing more than $11 billion in debt. The company has slowly been selling off its non-core units to help pay off creditors.

Ford loan gains strength

Ford Motor Co.'s term loan was stronger in trading as reports surfaced that the company expects to report a rise in sales for the month of August when compared with last year, according to traders.

The Dearborn, Mich.-based automaker's term loan was quoted at 87 bid, 87½ offered, up from 86¾ bid, 87¼ offered, the traders said.

August sales results will be revealed on Tuesday and are anticipated to be better than last year largely because of the government's "Cash for Clunkers" program.

In more recent Ford news, the company announced on Thursday that it is adding third production shifts at its Dearborn Truck Plant and Kansas City Assembly Plant's sport utility line to help meet strong demand for Ford F-150 pickups and Escape utility vehicles.

In August, Ford expects to post its first monthly year-over-year sales increase for F-Series trucks since October 2006, as well as another record-setting sales month for Escape.

Ford went on to say that it had a solid July sales month and it's headed toward an even stronger August.

On Aug. 3, Ford came out with July sales numbers in which total sales were 165,279, up 2.3% from 161,530 in the comparable period last year.

Broad market moves up

Elsewhere in the world of distressed, Burlington Coat Factory Warehouse Corp.'s 11 1/8% notes due 2015 "have been creeping up," a trader said, placing the issue at 93 bid, 94 offered. That compared with levels around 90 earlier in the week.

Eastman Kodak Co.'s 7¼% notes due 2013 have also been moving upward, he said. The notes ended at 72 on Monday and closed around 78 come Friday.

"I don't know what the hell is going on there," he said.

Meanwhile, Fairpoint Communications Inc.'s 13 1/8% notes due 2018 were "staying at the higher levels at 18," a trader said, noting that the bonds had moved up on Thursday from around 16.

"There seems to be some interest in those," he added.

Smurfit-Stone Container Corp.'s bonds - which had jumped to the low 60s earlier in the week from prior levels around 57 to 58 - were seen better again, despite a lack of any new news about the bankrupt cardboard packing maker.

A source saw the company's Jefferson Smurfit Corp. 8 ¼% notes due 2012 up another point on the day, to end at 63.

Paul Deckelman contributed to this article.

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