Distressed market firm, unchanged; MGM's new issue a non-starter; OPTI bonds hold their ground

By Stephanie N. Rotondo

Portland, Ore., Oct. 26 - Distressed debt was still gravitating toward the firm side, but ended Tuesday's session about unchanged, according to traders.

"I don't think it's moved much because there isn't anything left to buy," a trader said.

Another trader said that "overall, it's sort of quiet in the distressed world."

But investors were not even interested in MGM Resorts International Inc.'s new issue, which priced late Monday. Those bonds ended slightly below their original issue price and the rest of the gaming company's debt ended weaker to unchanged.

OPTI Canada Inc. paper meantime was in a holding pattern after having gyrated throughout Friday and Monday trading. The bonds were holding on to their Monday gains, but weren't much different than those previous levels.

MGM new issue fizzles

A trader said gaming credits "caught a bid and popped" during Monday trading, but come Tuesday, that was not the case.

MGM Resorts International's new 10% notes due 2016, for example, "didn't seem to get out of their own way," the trader said, seeing the new paper at 98 3/8 bid, 98 5/8 offered. That compared with the original issue price of 98.867.

The trader added that MGM's other issues were "pretty much unchanged."

Another market source saw the 6 5/8% notes due 2015 slipping a point to 88 bid.

The Las Vegas-based casino operator priced the $500 million issue of new debt on Monday. The company intends to use proceeds to pay down existing debt.

OPTI in a holding pattern

OPTI Canada debt "seemed somewhat active but price action looked basically unchanged," according to a trader.

He placed 8¼% and 7 7/8% notes due 2014 around 73.

Another trader called the 8¼% notes up a quarter to a half at 72¾ bid, 73¼ offered and the 7 7/8% notes at 72½ bid, 73 offered.

The Calgary-based oilsands producer's bonds have been trading on the active side since last week, though there hasn't been any fresh news to speak of. The company is announcing quarterly results later this week.

A&P up on week

A trader said that the Great Atlantic & Pacific Tea Co.'s 11 3/8% notes due 2015 "seemed like they stayed in the low-70s," although he saw them in a 71½ bid, 72 offered context, "pretty much where they started the day," but actually up a little from the 70-72 range observed on Monday.

"There was some activity, but it didn't seem like there was that much to me. I don't see a lot of quotes."

The Montvale, N.J.-based supermarket operator reported Friday that it was in the process of finalizing a new term loan that would boost its liquidity by "a significant amount" - but warned in its 10-Q report filed with the Securities and Exchange Commission that that if it is unable to improve its liquidity, "there is substantial doubt about our company's ability to continue as a going concern."

Broad market unchanged to firm

Elsewhere in the world of distressed debt, NewPage Corp.'s 11 3/8% notes due 2014 were seen at 95½ bid, 95¾ offered. A trader said most of the day's trades occurred "closer to the bid side, but within in the context of the market for most of the day."

Another trader said Washington Mutual Inc.'s senior bank paper "traded down late last night" to 363/4, but then "rebounded a touch" during Tuesday trading, closing around 371/2.

The trader also said General Motors Corp.'s benchmark 8 3/8% notes due 2033 were active around 351/2.

Dynegy Holdings, Inc.'s 8 3/8% notes due 2016 fell by nearly 1 point, to just under the 75 bid level.

Paul Deckelman contributed to this article

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