Trading volume better, distressed debt firms; Skilled settlement lifts bonds; NewPage weakens

By Stephanie N. Rotondo

Portland, Ore., Sept. 8 - It was a "huge day" for distressed bonds, a trader reported on Wednesday.

"Everybody that didn't care about anything yesterday cared today," he quipped.

For its part, Skilled Healthcare Group Inc. had a huge day as its bonds improved as much as 8 points on the day. The gains came as the company said it had come to terms with plaintiffs involved in a 2006 class action lawsuit.

Meanwhile, the overall firm tone of the day did little to help NewPage Corp.'s debt move up. Traders referred to the credit as one of the few losing ground during the midweek trading session.

Energy Future Holdings Corp. and ATP Oil & Gas Inc. experienced a surge in trading volume, according to market sources. However, though the bonds were trading on the active side, there was little in the way of price movement.

Skilled debt gets a boost

Skilled Healthcare Group's bonds jumped as much as 8 points after the company said it had reached a settlement agreement pertaining to a 2006 class action lawsuit.

One trader said a "boatload" of the 11% notes due 2014 changed hands, seeing the paper around 97¾ shortly before the market closed.

"That's definitely up like 2 points," he said.

At another desk, a trader said the bonds had gained 5 to 6 points from the previous week's levels. He also pegged the notes around 973/4.

Another trader said the credit was the day's "big mover." He placed the debt around 98.

And, yet another source said the 11% notes finished 7 to 8 points higher at 98 bid, 99 offered.

Late Tuesday, The Foothill Ranch, Calif.-based nursing home operator said it had come to terms with plaintiffs involved in the class action lawsuit that had alleged the company failed to employee enough staff at its various locations. Under the terms of the settlement agreement, Skilled Healthcare will pay $50 million, which will be funded via the company's revolving credit facility.

Additionally, the company's various facilities will be closely monitored for the next two years.

NewPage on loser list

NewPage bonds were "one of the few things that traded down," a trader reported.

The trader said about "$20-odd million" of the 11 3/8% notes due 2014 turned over around 88. He deemed the level down "a solid point."

Another trader said the 11 3/8% notes lost "almost a point" to close around 88 3/4, while the 10% notes due 2012 dipped "about 2 points" to 44.

The 11 3/8% notes were seen "a smidge lower" at 88½ bid, 89 offered by another market source.

The Miamisburg, Ohio-based company made the news Wednesday after it was learned that a potential buyer had been found for the idled mill in Kimberly, Ohio.

The mill shut down in September 2008 and cost about 600 jobs. The buyer has agreed to work with NewPage to determine how much it would cost to convert the mill to produce different grades of paper. The sale is predicated on the buyer not going into competition with NewPage.

TXU, ATP unchanged, active

There was a bit of action in the energy arena, according to traders, but price levels were about the same as they had been in the previous session.

A trader said $20 million to $30 million of Energy Future Holdings 11¼% notes due 2017 traded around 46, which he said was "kind of right where it was."

The trader also saw trading volume in ATP Oil & Gas' 11 7/8% notes due 2015 pick up, with $10 million to $15 million changing hands. Still, he deemed the bonds "a little unchanged" at 81 bid, 81½ offered.

Another trader said the TXU bonds were "not much changed," also around that 48 mark. He agreed that ATP's paper was "pretty unchanged" at 80¾ bid, 81¼ offered.

Blockbuster higher, GM steady

Also going on in the distressed space, Blockbuster Inc.'s 11¾% notes due 2014 were quoted higher at 52 bid, 53 offered, according to a trader. However, he noted that the paper did not actually trade.

General Motors Corp.'s benchmark 8 3/8% notes due 2033 were meantime unchanged at 31½ bid, 31¾ offered, another trader said.

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