Leap unchanged, weaker; Kodak debt dips; Blockbuster loses steam; Catalyst up, NewPage steady

By Stephanie N. Rotondo

Portland, Ore., Jan. 29 - It was a "same-old, same-old" day in Friday's distressed debt market, as activity was dominated by the same names that have appeared over and over the last few weeks.

"It was hot and cold," a trader said, adding that it was "a light volume day."

"The market tried to do better out of the gate," he said. "It didn't exactly trade up, but it didn't sell down either."

The focus, he said, was on the calendar and there was still plenty of cash around. However, "there wasn't that urgency to put cash to work at the moment and there was no urgency to get out of paper either. I think prices and volumes reflect that."

Of the new names garnering attention, Leap Wireless International Inc. debt slipped some, even as the company's equity rallied. According to news reports, the latter was due to renewed chatter regarding a deal with MetroPCS.

Meanwhile, Eastman Kodak Co. continued to see busy trading, though traders did not see much price movement. The sources called the bonds unchanged to down half a point on the day.

Blockbuster Inc. also remained active. However, the movie rental chain's notes gave back some of the gains it had incurred over the last few sessions.

Leap notes unchanged to weaker

Leap Wireless notes ended "unchanged to maybe down half a point," according to a trader.

The trader quoted the 9 4/8% notes due 2014 at 99½ bid, par offered.

At another desk, a trader called the 7¾% notes due 2016 nearly a point weaker at par½ bid, 101 offered.

But while the bonds were on the decline, the equity moved higher. Buzz was that the gains were due to the belief that San Diego-based Leap might join forces with MetroPCS, another pay-as-you-go wireless provider.

Kodak debt dips

Eastman Kodak gave back some of the gains earned Thursday, which had followed the release of better-than-expected earnings.

A trader said the 7¼% notes due 2013 were "active again, although there was not much price movement." He pegged the issue at 89½ bid, 90 offered, "down maybe half a point or so."

Another trader also deemed the debt as active, adding that there were "lots of odd-lot trades. Looks like somebody's retailing them out." He saw the issue ending unchanged at "901/2-ish."

Yet another source called the paper a half-point softer at 90½ bid.

On Thursday, the Rochester, N.Y.-based company posted earnings of $430 million, or $1.36 per share. For the same period in 2008, the company reported a loss of $914 million, or $3.40 per share.

Sales came to $2.582 billion, a 45% increase form the third quarter of 2009 and a 6% increase year over year.

For the full fiscal year, Eastman saw a net loss of $232 million, or $0.87 per share, versus a loss of $727 million, or $2.58 per share, in 2008. Revenues were 47.606 billion, a 19% decline from the prior year.

Blockbuster loses steam

As has been typical over the last week or so, Blockbuster bonds continued to reign. But Friday's session saw some softening in the name.

A trader said the 9% notes due 2012 were "down a few more points," trading with a 24 handle. The trader had no explanation for the dip, opining that the market was "just digesting what is going on there."

When asked if the declines could be a result of news that rival Movie Gallery Inc. was considering filing for bankruptcy - again - he wholeheartedly disagreed.

"If people are selling based on that, that's just crazy," he said. "The reality is if Movie Gallery is filing that should take away some competition from Blockbuster. So wouldn't that, in theory, be good?"

Concerns regarding the in-store model utilized by both Dallas-based Blockbuster and Dothan, Ala.-based Movie Gallery have given investors a lot to think about. Add that to Blockbuster's recently released dismal preliminary earnings and the result is a lot of action in the bonds - both up and down.

Catalyst up, NewPage steady

A trader said that a "fair amount" of Catalyst Paper Corp.'s 7 3/8% notes due 2014 traded.

"It's the first time I'm seeing them trade" after the company revised the terms of an exchange offer for the debt.

He said the bonds opened 66½ bid, 66¾ offered and ended closer to 67 bid, 68 offered.

Also in the papermaking world, NewPage Corp.'s 10% notes due 2012 were still actively trading, but were essentially unchanged around 66, a trader said.

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