Clear Channel debt 'busy' post-earnings; First Data mostly firm on numbers; broad market mixed

By Stephanie N. Rotondo

Portland, Ore., Aug. 10 - Trading in distressed bonds continued to be overshadowed by new issues on Tuesday, but investors did find time to dabble in distressed paper.

Clear Channel Communications Inc. was an actively traded name following the company's Monday release of its second quarter results. But it was a mixed bag for the bonds, as traders called the debt both up and down on the day.

Meanwhile, First Data Corp.'s notes firmed a tad after the company posted a narrower loss for the second quarter. The company also announced it had secured the consents it needed to amend its bank credit facilities.

Clear Channel mixed post-earnings

Clear Channel Communications' debt was "busy," a trader said, following the Monday release of the company's earnings.

The trader said the 5¼% notes due 2014 were the "big trader," with $25 million to $30 million changing hands. He called the paper stronger at 631/2.

However, he said the 11% notes due 2016 were weaker around 77, with some "$30-odd million" trading.

Of the company's other various issues, he said they were "kind of right where they were [the day before]."

Another trader said trading in the credit was "pretty active." He also saw the 5¼% notes around the 63½ level, deeming that up a point. The 11% notes were meantime a point weaker around the 77 mark.

At another desk, a trader saw those bonds having firmed to about 77 from Monday's close around 75½ bid, 77½ offered, to which they had risen from prior levels at 73 bid, 74 offered. He cited the disclosure in the company's 10-Q report for the latest quarter filed with the Securities and Exchange Commission on Monday that the media company was electing to pay the interest on the bonds for the current period that began on Aug. 1 in cash rather than in additional notes.

Also on Monday, the San Antonio-based multimedia company reported its second quarter results, showing a 4% increase in revenues to $1.49 billion.

Operating expenses were down 2% year over year and net loss narrowed to $77.2 million from $3.68 billion in 2009.

"During the quarter, we saw improvement in both revenue and profit margins across our radio and outdoor platforms," said Mark Mays, president and chief executive officer, in the earnings release. "The fundamentals of our business are clearly improving, as we return to revenue growth and attain the benefits of our cost reduction efforts."

Clear Channel also announced a stock purchase program for the class A common stock of its Clear Channel Outdoor Holdings Inc. subsidiary. On that news, Moody's investors service said the proposed transaction could have a negative implication, given the company's huge debt and leverage burden.

First Data mostly firm on numbers

First Data announced its earnings on Tuesday and the improved results helped give its bonds a nominal boost, according to traders.

A trader said the 9 7/8% notes due 2015 closed slightly higher around 80¾ - a level echoed at several other desks, as well. The 10.55% notes due 2015 were unchanged, however, around 793/4.

For the second quarter, the Atlanta-based electronic payment processor reported consolidated revenues of $2.6 billion, an 18% increase from the year before. The company attributed the gain to its alliance with Bank of America Merchant Services.

Net loss was also lower at $171.2 million, versus $195.9 million in the second quarter of 2009.

At the end of the quarter, the company had $2 billion in liquidity, including $285 million in cash and $1.7 billion available under its revolving credit facility.

Additionally, First Data said it had received the consents it needed to amend its senior secured credit facility, which would allow for the issuance of new debt to pay off old debt.

"The credit amendment provides us with the flexibility to extend the maturity profile of our capital structure in a prudent and cost-effective manner, going to market on our schedule," said Ray Winborne, chief financial officer, during the second-quarter earnings conference call.

"This is a positive first step that will enhance our capital structure flexibility and provide continued access to long-term funding."

Broad market mixed

Elsewhere in the world of distressed debt, NewPage Corp.'s 11 3/8% notes due 2014 were "not much different," ending around 881/4.

On the other hand, Rite Aid Corp.'s bonds were mixed just one day after the company launched a new issue. The trader said the 9½% notes due 2017 were "pretty active," and about 1¼ points weaker around 813/4.

Another source, however, said the 8 5/8% notes due 2015 showed modest gains, closing at 84 bid.

Paul Deckelman contributed to this article

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