Clear Channel notes head higher with market; Harrah's improves; Rotech debt steady on numbers

By Stephanie N. Rotondo

Portland, Ore., May 10 - The distressed debt market "snapped back a little," a trader reported Monday, regaining some of the losses incurred in last week's declines led by the equity markets.

However, a trader said the market "kind of fizzled," and most credits only got about half of what it lost the previous week.

"I thought it would be more robust than it was," the trader said. "I thought stuff would be bid without [an offer] a lot, but it's not the case."

But even as the market was seen heading back up, some expressed concern about how fragile the market was and the level of support that was out there.

"[Last week] tells us the market is a bit thin," a source said, adding that there was "panic if things went wrong.

"It makes you wonder where the support is in the market when there is just a hint of bad news," he added.

And, he said, the day's gains show that there "is money on the sidelines."

Clear Channel Communications Inc. saw its bonds moving higher with the market, improving by as much as 6 points on the day. In addition to the general market trend, first-quarter earnings published by the company's parent could have helped out the bonds.

Harrah's Entertainment Inc.'s bonds were also better with the market. Traders saw the casino operator's debt gaining anywhere from 3 to 5 points during the session. New casino revenue figures from Atlantic City might have also given the company's notes a boost.

Though the rest of the market was on the firm side, Rotech Healthcare Inc.'s paper was steady following the release of the company's earnings. According to one trader, the bonds didn't trade, but offers were around the same levels seen pre-numbers.

And, among other market-climbers, Smurfit-Stone Container Corp. saw its bonds edging closer to parity once again.

Clear Channel heads up

Clear Channel Communications' debt gained as much as 6 points on the day, being one of several credits that lost some weight last week as a result of the equity market's freefall.

A trader placed the 11% notes due 2016 at 76 bid, 78 offered, up from 70 bid, 71 offered on Friday. He also saw the 10¾% notes due 2016 at 80 bid, 81 offered, compared with levels around 75 last week.

Another trader, however, called the 10¾% notes up only 3 points around 781/2.

Just after the market closed Monday, Clear Channel's parent company, CC Media Holdings Inc., as well as Clear Channel Outdoor Holdings Inc., released first-quarter results.

For the quarter ending March 31, CC Media posted revenues of $1.26 billion, a 5% increase year over year. Operating expenses meantime fell 5%.

Consolidated net loss came to $179.6 million, versus $428 million for the first quarter of 2009.

Clear Channel Outdoor meanwhile reported revenues of $608.8 million, also a 5% increase year over year. Net loss narrowed to $48.8 million, or 14 cents per share, from $91.4 million, or 25 cents per share, the year before.

"Our first quarter results reflect the market leadership of our asset base in an improving advertising environment, as well as the positive impact of our restructuring initiatives," said Mark Mays, chief executive officer of Clear Channel Outdoor, in the earnings release.

"The full effect of the recovering ad market on our top line was offset in part by our divestiture of non-strategic and less profitable assets, which impacted our results in the prior year's first quarter. Our restructuring plan is producing tangible results, as evidenced by the decrease to our cost structure and the subsequent improvement in our profit margins."

Clear Channel Communications is a San Antonio-based multimedia company.

Harrah's improves with market

Harrah's Entertainment's bonds followed the general market trend, recouping at least 3 points lost in last week's downward spiral.

A trader called the 10% notes due 2018 up 3 points to 823/4.

Another market source saw the same issue gaining nearly 5 points to close at 84¾ bid.

In addition to the firmer marketplace, Harrah's debt might have also been helped out by the release of Atlantic City's monthly revenue report. The report showed the 11 casinos operating on the Jersey Shore winning $311.5 million in April - a less than 1% decline from April 2009 and the smallest dip in the last 20 months.

Harrah's Resort Atlantic City was the month's top winner, with revenues jumping up 13.3% to $41.5 million.

Harrah's is a Las Vegas-based casino operator.

Rotech steady post-numbers

Orlando, Fla.-based Rotech Healthcare announced its first-quarter results Monday, but the numbers did little to stir investor intrigue.

A trader said he saw the 9½% notes due 2012 offered at 931/2, though he noted he was "only seeing offers. I haven't seen a bid side in a while."

For the quarter, Rotech reported net revenues of $110.6 million, a $9.3 million increase form the previous year.

As of March 31, the company had $58.7 million in cash and approximately $514.6 million of outstanding debt.

"First quarter results demonstrated solid growth in net revenues and patient counts," said Philip Carter, president and CEO, in a statement. "Our success in 2009 in reducing SG&A by more than $45 million compared to 2008 has positioned us in 2010 to better address our upcoming debt maturities. We intend to refinance part or all of our debt prior to maturity, subject, of course, to continued favorable performance and market conditions."

Rotech Healthcare is a home medical equipment provider.

Smurfit regains strength

Smurfit-Stone Container paper inched up a solid 3 points, traders reported, in line with the rest of the market.

A trader placed the 8% notes due 2017 around the 94 mark.

Another trader said the issue hit a high of 96 bid, 96½ offered before settling in around 94. He noted that the debt had been trading with a 91 handle on Friday.

Smurfit-Stone Container is a Chicago-based manufacturer of paperboard and paper packaging.

Broad market recoups losses

Elsewhere in distressed territory, General Motors Corp.'s 8 3/8% notes due 2033 jumped around, according to a trader. He said the benchmark bonds initially traded up 4 points to the 36½ levels, but came back in a tad to end at 341/2.

Another trader saw American International Group Inc.'s 6.9% notes due 2017 closing around 80, a gain of 3 points on the day.

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