Distressed debt rallies ahead of holiday; First Data, Clear Channel active, finishes better

By Stephanie N. Rotondo

Portland, Ore., Nov. 24 - The last real trading day before the Thanksgiving weekend brought a small rally to the distressed debt market, after two days of declines.

"Most things did [trade up]," a trader said.

"Maybe things had a slightly better tone," said another. "But there wasn't a lot of volume to support it."

"It was pretty quiet, as you may imagine," the first trader added, given the holiday and the fact that many players left their desks before the market even closed.

Among the day's more active names were First Data Corp. and Clear Channel Communications Inc. Traders saw the bonds finishing unchanged to slightly better, though there was no news out on either company.

Sbarro Inc. was also seen moving around, though there has yet to be any fresh news out on the struggling fast food eatery.

The bond market will be closed Thursday for Thanksgiving. Though the market will reopen on Friday, market sources are expecting little business to occur.

First Data active, better

A trader called First Data's 9 7/8% notes due 2015 the day's "most active" bond in an otherwise lackluster pre-holiday trading session.

He deemed the notes up half a point at 861/2, while the 10.55% notes due 2015 - "another active one," he said - inched up a quarter to 881/4.

Another trader, however, called the 10.55% notes "about unchanged" at 88 bid, 88¼ offered.

The bonds had dropped in the previous session, a day in which one market player speculated that accounts were "cleaning up" before the long holiday weekend. Wednesday's gains in the credit were in line with a marginal general market rally ahead of same said holiday.

Last week, the company announced a debt-for-debt exchange aimed at refinancing $5.5 billion of debt. A company executive was also quoted as saying the Atlanta-based electronic payment processor could "stomach" an upcoming interest expense payment.

Clear Channel improves

Clear Channel Communications' bonds were also "pretty active," according to a trader.

He deemed the 10¾% notes due 2016 up "about a point" at 763/4.

At another shop, a trader said the name was "a little more active," but "pretty much unchanged." He saw the 10¾% notes at 76½ and the 11% notes due 2016 at 751/2.

There was no fresh news out on the San Antonio-based multimedia company.

Sbarro moves about

A market source saw Sbarro's 10 3/8% notes due 2015 down a point on the session at 47½ bid.

However, at another desk, that same level was considered essentially unchanged.

Back on Monday, Melville, N.Y.-based Italian-style quick-service restaurant franchiser and operator Sbarro's bonds had been seen moving up to the 48½ level in late dealings, a gain of more than 3 points, on the strength of several large trades late in the session.

However, there was no fresh news seen out about the company, which has been struggling lately and issued a "going concern" warning as part of its recent quarterly filing with the Securities and Exchange Commission earlier this month.

Sbarro's also disclosed at that time that it does not expect to be in compliance with the minimum EBITDA covenant contained in its credit facilities in either this year's fourth quarter or next year's first quarter.

Broad market rallies

Among other distressed credits, NewPage Corp.'s 11 3/8% notes due 2014 moved up half a point to 921/2, a trader said.

Another trader called General Motors Corp.'s benchmark 8 3/8% notes due 2033 "a little better" at 31½ bid, 32 offered.

Paul Deckelman contributed to this article

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