Looming holiday curbs distressed market activity; Clear Channel up on numbers; Realogy mixed

By Stephanie N. Rotondo

Portland, Ore., Nov. 8 - Distressed debt finished out Monday trading about flat amid low trading volumes, traders reported.

Still, there was some activity in credits with news out, such as Clear Channel Communications Inc. The company reported its third quarter results, which showed an improvement in revenues. As a result, the San Antonio-based multimedia company's debt traded at least a point higher on the day.

Investors were also expecting to see numbers from Realogy Corp. on Tuesday. However, traders saw thin volume in the name and the bonds were generally mixed.

Dynegy Inc. was also seen ending mixed after the company announced its quarterly results. In addition to the results announcement, the company also warned of a potential covenant breach and heralded a favorable report regarding its planned takeover from an investor research firm.

Clear Channel trades up

Clear Channel Communications paper gained a point across the board ahead of the release of earnings from the parent company, CC Media Holdings Inc., and a subsidiary, Clear Channel Outdoor Holdings Inc.

The numbers came after the market closed Monday.

A trader saw about $20 million to $25 million of the 10¾% notes due 2016 changing hands at 821/2. Another $15 million of the 11% notes due 2016 turned over around 80 5/8, while "$10 and change [million]" of the 5½% notes due 2014 traded at 763/4.

Another trader echoed the levels on the 10¾% notes and 5½% notes, but placed the 11% notes around 801/2.

For the quarter ending Sept. 30, CC Media reported a 6% increase in revenues year over year, bringing the total to $1.48 billion for the third quarter of 2010. The company noted that had it not been for foreign-exchange rates, the increase would have been 7%.

However, net loss widened to $150.4 million from $92.7 million the year before.

Clear Channel Outdoor meanwhile posted a 5% increase in revenues at $695.1 million. And, its net loss fell to $31.9 million from $34.1 million.

Realogy readies quarterly report

Ahead of its own earnings release on Tuesday, Realogy bonds traded in mixed fashion during Monday's session.

A trader called the debt "probably pretty unchanged" in general, but saw the 10½% notes due 2014 slipping half a point to 901/2, while the 12 3/8% notes due 2015 gained half a point to 853/4.

A trader at another shop agreed with those levels as well.

Realogy is a Parsippany, N.J.-based real estate services provider.

Dynegy mixed post-earnings

Houston-based power producer lauded its third quarter results on Monday and also said it would likely breach covenants under its credit facility in the near term.

Still, the company's bonds showed little reaction, ending mixed on the day, while its strip of bank debt ended the day unchanged.

A trader said the 7¾% notes due 2019 traded up half a point to 723/4, even as the 8 3/8% notes due 2016 fell the same amount to 783/4.

Another trader said there "wasn't as much trading as I would expect" in Dynegy debt. When asked why, he pointed to recent activity in power companies such as Energy Future Holdings Corp.

"It hasn't kept pace with everything that trades all the time," he explained.

He called the 7¾% notes half a point better, also around 723/4. But the 8 3/8% notes were up nearly a point, at 783/4.

Another market source deemed the 7¾% notes up 1½ points at 73 bid.

The strip of bank debt was meantime quoted at 98¼ bid, 99¼ offered, unchanged on the day.

Dynegy reported a $24 million, or 20 cents per share, net loss, which was down from the $212 million, or $1.26 per share, loss posted a year ago.

In the earnings release, Dynegy also said there was a potential of non-compliance on its credit facility and that, as such, it would attempt to extend, amend or refinance the debt.

Also in the news, Dynegy's $4.50-per share takeover bid by Blackstone Group was given a nod from RiskMetrics Group Inc. on Monday. That followed a negative vote from Glass Lewis & Co. LLC and a "desirable" rating from Egan-Jones ratings Co. on Friday.

The company also wrote an open letter to shareholders on Monday, in response to Seneca Capital's assertion that the takeover was unfavorable to investors.

"Dynegy believes Seneca is advocating a reckless strategy of turning down the certainty and cash premium value offered by the Blackstone transaction in the hope that natural gas prices improve dramatically above that which is currently anticipated by the market," the letter said, calling Seneca's opposition "built on a foundation of misinformation."

Looming holiday dampens spirits

The bond market will be closed on Thursday in observance of Veteran's Day. Market sources had differing opinions on what that meant for the week's performance.

"It could mean a slow day on Friday," a trader said, already lamenting the "pretty low volumes" seen Monday. "Could mean a slow day on Wednesday too.

"This week could be pretty screwed up," he added.

But another trader opined that Tuesday might see a pick-up in activity, which could then lead into a reasonably active Wednesday.

"We've got a two-day window to get it all in," he said.

NewPage, GM gain

Among other distressed credits, NewPage Corp.'s 11 3/8% notes due 2014 inched up to 951/2, according to a trader.

Another trader said General Motors Corp.'s benchmark 8 3/8% notes due 2033 "continues to creep up," pegging the issue at 36½ bid, 37 offered.

Sara Rosenberg contributed to this article

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