WaMu files plan, bonds still firm; Paper products arena mixed; Lyondell loan to begin trading

By Stephanie N. Rotondo and Sara Rosenberg

Portland, Ore., March 29 - Distressed debt was unchanged to better on the day, according to traders.

However, the traders noted that it was a "rainy holiday weekday," alluding to the dismal weather in New York and the looming Easter holiday.

"There was not a tremendous amount of volume," a trader said. "It's going to be a slow week."

Washington Mutual Inc.'s bank seniors remained on an upward track, following the company's filing of its plan of reorganization late Friday. A trader said that "other paper" - as in, not bank paper - was holding its ground.

The paper products arena finished the day mixed, according to sources. Smurfit-Stone Container Corp.'s bonds were either better or worse, depending on whom you talked to, while NewPage Corp.'s debt was unchanged.

Elsewhere, Lyondell Chemical Co.'s new credit facility was supposed to break for trading on Monday. However, a source said that the debt would begin trading on Tuesday instead.

WaMu files plan, bonds firm

Washington Mutual's bonds continued to improve during Monday trading as a result of the company's filing of its reorganization plan late Friday.

A trader said the bank seniors - like the 5/55% notes due 2010 - earned a point to end around 47.

"The others were trading, but they were pretty unchanged," he said.

On Friday, traders told Prospect News that WaMu paper was climbing. However, they had expected the Seattle-based company's plan of reorganization to be filed that day and by the end of business, none was seen.

As it turned out, the company did file the plan late Friday, giving investors a chance to digest the news over the weekend.

The plan incorporates the recent settlement reached with JPMorgan Chase Bank and the Federal Deposit Insurance Corp. WaMu noted in a press release announcing the filing that the FDIC has not yet agreed to all terms of that settlement, but that "discussions are ongoing among the parties and they are hopeful that such agreement will be obtained in the near future."

"WMI is pleased to have reached this important milestone in the Chapter 11 process," the company said in its statement. "The proposed plan will provide substantial recoveries for the company's creditors and reflects WMI's diligent efforts over the last 18 months to maximize the value of the bankruptcy estate."

The plan has received support from JPMorgan, as well as "significant creditor groups."

WaMu has requested a May 19 confirmation hearing and hopes the plan will be accepted by July 20.

Paper products arena mixed

In the paper products sector, Smurfit-Stone Container's bonds were "maybe a little bit lower," according to a trader.

The trader saw the 8¼% notes due 2012 at 89 bid, 89½ offered, "down maybe as much as three-quarters to a point."

Another source, however, deemed the paper up a point at 92 bid.

Meanwhile, NewPage notes were unchanged. The first trader placed the 10% notes due 2012 around "69-ish," while the 11 3/8% notes due 2014 were seen "still around par."

At another desk, a trader said he saw only "small trades" in NewPage's debt, seeing the 10% notes around 69 and the 11 3/8% notes at par bid, par ¼ offered.

Also, the trader pegged Catalyst Paper Corp.'s 7 3/8% notes due 2014 at 68½ bid, 70½ offered.

"That was the market in the street, but I don't think there was any trading," he said.

Lyondell loan set to trade

Lyondell Chemical's credit facility is expected to break for trading on Tuesday, according to sources, who said that originally the event was supposed to take place on Monday but it got pushed off.

The $2.25 billion credit facility consists of a $1.75 billion ABL revolver and a $500 million six-year senior secured term loan B (Ba3).

Pricing on the term loan B is Libor plus 400 bps with a 1.5% Libor floor, and it was sold at an original issue discount of 99.

During syndication, the term loan B was downsized from $1 billion as the company's bond offering was increased to $2.75 billion from $2.25 billion, pricing was reduced from Libor plus 425 bps, the Libor floor was lowered from 2% and the financial covenants - which included a maximum first-lien leverage ratio and a minimum interest coverage ratio - were eliminated.

Proceeds from Lyondell's credit facility, the new senior secured notes, a new European securitization facility and a $2.8 billion rights offering will be used to repay and replace existing debt when the company exits bankruptcy.

The notes, comprising a $2.25 billion dollar tranche and a €375 million euro tranche, priced last Wednesday at par to yield 8%.

Joint bookrunners on the term loan B are UBS, Bank of America, Barclays, Citigroup, Credit Suisse, Deutsche Bank, JPMorgan, Morgan Stanley and Wells Fargo, with UBS the left lead. Citigroup is the left lead on the ABL revolver.

Lyondell is a U.S. subsidiary of LyondellBasell Industries AF SCA, a Netherlands-based polymer, petrochemicals and fuels company.

Broad market steady

Elsewhere in distressed territory, a trader quoted MGM Mirage's 13% notes due 2013 at 117 bid, 117½ offered.

In the autosphere, General Motors Corp.'s 8 3/8% notes due 2033 "continued to be active, but there was not that much price movement," a trader said.

The trader pegged the issue at 38 bid, 38¼ offered. Another trader placed the bonds at 37¾ bid, 38¼ offered.

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