Harrah's debt slips post-earnings; First Data bonds mixed, loans up; Chemtura steady to better

By Stephanie N. Rotondo

Portland, Ore., Aug. 4 - The secondary market saw a "good amount of trading," a trader said Wednesday, giving distressed bonds a general uplift.

"The rising tide raises all boats," quoted another trader. "That's the kind of game people are playing."

"This is going to run right into the middle of September," he further opined of the lengthy market rally. "Then we'll see."

But a "rising tide" did not do much to help out Harrah's Entertainment Inc.'s debt. The bonds were seen losing ground - though modestly so - after reporting its second-quarter results. The results showed a swing to a loss, versus a year-ago profit.

Meanwhile, trading was active in First Data Corp.'s bonds, as well as its bank debt. The notes were mixed, while the loans went right up, following news that company had launched an amendment to its loan agreements.

Chemtura Corp. paper held in there during the trading day. The company was given approval to go ahead with revisions to its plan support agreement.

Harrah's slips post-earnings

Harrah's Entertainment's bonds were among the few losers seen in Wednesday's market, a trader said.

"It was one of the few bonds to not trade up," he said.

He called the 10% notes due 2018 the "big trader" of the various Harrah's issues, with $40 million to $50 million changing hands. The paper dipped half a point, closing at 84 bid, 84½ offered.

The trader also saw the 11¼% notes due 2017 slip to 108 bid, 108½ offered and the 10¾% notes due 2016 "up and down" around 83.

Another trader said the 10% notes fell half a point to around 841/4.

For the second quarter, the Las Vegas-based casino operator reported a 2.2% decline in revenues at $2.22 billion, down from $2.27 billion the year before. The company said the revenue slide was "due primarily to the continuing impact of the recession on customers' discretionary spending."

Net loss came to $274 million, versus a year-ago profit of $2.29 billion.

For the first half of the year, Harrah's saw its revenue fall 2.6% to $4.41 billion from $4.53 billion. The company has lost $469.6 million since January, which compared with a $2.16 billion gain in the first half of 2009.

"After two years of the worst economic downturn since the Great Depression, it appears that year-over-year revenue declines are moderating in virtually all of our markets," commented Gary Loveman, chairman, chief executive officer and president, in the earnings release.

"To ensure our margins are maintained, we will remain vigilant with respect to our expense structure."

First Data bonds mixed, loans up

Traders gave mixed reports on First Data's debt performance after the company announced it was looking to change certain terms under its loan agreements to allow it to pay down debt.

One trader said about $50 million of the 9 7/8% notes due 2015 changed hands, but he called the notes off slightly at 801/4. He added that action in that credit was "bizarre," as it tends to trade somewhat heavily, "but they don't move."

Another source, however, deemed the bonds up 1½ points to 82 bid.

In the bank debt, one trader had the term loan B-1 quoted at 87 5/8 bid, 88 1/8 offered, up from 87 bid, 87½ offered, the term loan B-2 quoted at 87½ bid, 88 offered, up from 87 bid, 87 3/8 offered, the term loan B-3 quoted at 87½ bid, 88 offered, up from 87 bid, 87 3/8 offered, and the delayed-draw term loan quoted at 87½ bid, 88½ offered, up from 85½ bid, 87½ offered.

A second trader had the term loan B-1 quoted at 87 7/8 bid, 88¼ offered, up from 87 bid, 87 3/8 offered, the term loan B-2 quoted at 87 7/8 bid, 88¼ offered, up from 86 7/8 bid, 87¼ offered, and the term loan B-3 quoted at 87 7/8 bid, 88¼ offered, up from 86 7/8 bid, 87¼ offered.

The second trader also remarked that the term loan B-1, B-2 and B-3 were seen as high as 89 bid, 89½ offered right after the news hit, but then came back in a bit.

The Atlanta-based electronic payment processor was scheduled to hold a lender call during Wednesday's session to discuss the proposed changes.

"Today we are asking lenders for tools that create more flexibility and options to refinance and extend maturities of the current capital structure," Chip Swearngan, a First Data spokesman, was quoted as saying in a Bloomberg article. "It's a proactive first step to begin to address the company's long-term debt maturities."

Specifically, the amendment to the loan agreements would require First Data to issue up to $500 million in new notes within 90 days of execution of the agreement. The proceeds would be used to prepay term loans at par.

The revisions would also allow for the issuance of junior debt, the proceeds of which would be used to redeemed or repay current debt.

Chemtura steady to better

Chemtura debt inched up in midweek trading, according to market sources.

A trader pegged the 7% notes that were to have matured in 2009 at 108 and the 6 7/8% notes due 2016 at 1133/4. He called both issues up a quarter of a point.

Another trader, however, said the bonds were unchanged, placing them at the same levels as the first trader.

The second trader noted that chemical credits such as Ineos Group and LyondellBasell have been gaining investor interest, but that hasn't really spread to Chemtura. He speculated that the bonds would trade more once the Middlebury, Conn.-based company exited bankruptcy.

The company got one step closer to exiting Chapter 11 protections on Wednesday. Chemtura and a group of shareholders reportedly reached a settlement pertaining to a plan support agreement, allowing the company to file a revised agreement.

The company is also in process of securing financing that would allow them to leave the trappings of bankruptcy behind. Court documents state that Chemtura is hoping to get approval on a $1.025 billion facility, which includes a revolver and debt issuance.

Edison firms, NewPage treads water

Elsewhere in earnings-related news, Edison International Inc.'s 7% notes due 2017 improved a point to around 70, according to a trader, while the 7.20% notes due 2019 also gained a point to end around 69.

The power producer posted its earnings on Wednesday.

And, NewPage Corp.'s 11 3/8% notes due 2014 were "basically unchanged," the trader said, around 91 7/8.

Another trader also called the debt unchanged at 91 7/8 bid, 92 offered, on "no volume at all."

The Miamisburg, Ohio-based papermaker reports its second-quarter results on Thursday.

Sara Rosenberg contributed to this article

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