Tribune bonds pop as plan fails; McJunkin debt falls on downgrade; NewPage notes remain weak

By Stephanie N. Rotondo

Portland, Ore., Aug. 20 - Distressed debt followed Thursday's trend, as volumes fell off during the final trading session of the week.

"Volume was horrible," a trader said.

Another distressed-debt trader described Friday's session as "miserable. Quiet. Blah."

It was, he said, "very boring in the distressed world.

"It was an August Friday," he said. "A lot of people left early."

Still, bonds were generally mixed on the day.

Tribune Co.'s notes gained some ground, as the company's bankruptcy plan fell apart. The company said it intended to file a new plan soon and that it hoped it would be attractive to a larger group of creditors.

Meanwhile, a rating downgrade put pressure on McJunkin Red Man Corp.'s debt. One trader speculated that the rating change would not be the last.

And, NewPage Corp. remained weak in trading. However, after losing 6 to 7 points in the previous two sessions, the bonds were only down by fractions on Friday.

Tribune pops as plan fails

Newspaper publisher Tribune saw its bonds heading upward after the company said it would redo its reorganization plan.

A trader called the bonds better around 42, noting that the various Tribune issues tended to trade on top of one another.

Another market source quoted the debt generically - and wide - at 41 bid, 43 offered, which he said was up 1 to 4 points, depending on the issue.

The company's bankrupt exit plan unraveled after negotiations with senior lenders fell apart. The company had entered into talks with the lenders after it was ruled that a prior agreement was a no-go based on findings that the lenders might have been involved in a fraudulent transfer of the company in 2007.

A new plan is expected to be filed by Aug. 27 and is expected to be attractive to a larger group of creditors. The current plan would have given the senior lenders more than 90% of the reorganized company.

Alternatively, if the new plan does not get enough creditor support, the company could file lawsuits related to the 2007 leveraged buyout.

McJunkin falls on downgrade

McJunkin Red Man's 9½% notes due 2016 fell in Friday trading, following a downgrade by Standard & Poor's, according to a trader.

The trader placed the notes at 79 bid, 80 offered. He remarked that the bonds had been trading in the high-90s just two weeks ago.

He added that the Houston-based company would "probably get hit by Moody's" as well.

S&P dropped McJunkin's corporate credit rating to B from B+ and also lowered other ratings. The rating agency said the outlook was negative.

S&P said that the downgrade was due to the belief that near-term operating performance would remain under pressure as the economy attempts to recover. Additionally, McJunkin's high leverage resulted in the negative outlook.

The company did not return calls seeking comment on Friday.

NewPage remains weak

A trader said that NewPage's 11 3/8% notes due 2014 were "maybe a smidge lower" than Thursday levels.

He pegged the bonds at 79¾ bid, 80 offered.

Another trader quoted the notes at 79½ bid, 79¾ offered, on $15 million to $20 million traded.

There was still no news out on the Miamisburg, Ohio-based papermaker to explain the recent losses.

Nuveen slips

A trader saw Nuveen Investments Inc.'s 10½% notes due 2015 at 95½ bid, 96 offered, which he called down a point on the day, "but not on very active trading."

There was no fresh news out on the Chicago-based financial services company that might explain the decline.

Paul Deckelman contributed to this article

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