New issuance dominates market, distressed space muted; NewPage stays active; Sprint gets boost

By Stephanie N. Rotondo

Portland, Ore., Sept. 13 - A flurry of new issues took the spotlight on Monday, leaving little room for activity in the distressed debt arena.

"Most of the trading is around new issue names or larger five-B paper," a trader said.

Another trader estimated that as much as $4 billion in new issues priced during the session.

"Every new issue in the world came today," he quipped.

Another trader in distressed bonds said that things were "a bit on the boring side" on Monday, opining that "a lot of stuff" has recently moved up in price - and distressed "is disappearing," with many formerly badly battered bonds now trading in the 90s, or at least the 80s.

Still, the market was generally firmer.

"For the first time in awhile, you are seeing people back in their seats and interested in the market," a source noted. There was also a lot of cash in the market, though accounts were not yet ready to buy too much, he added.

NewPage Corp. continued to be the most actively traded distressed credit, though there was no news out on the company. Traders saw the bonds gaining as much as a point on the day.

Meanwhile, Sprint Nextel Corp.'s bonds traded up in line with the rest of the market. As with NewPage, there was no news out to explain the gains otherwise.

There was, however, very little going on in Tribune Co.'s debt. This surprised one market player, as the company's creditors were attempting to secure their right to sue the company's owner and its shareholders in regard to a 2007 leveraged buyout.

NewPage notes head up

NewPage remained one of the more active names under the distressed umbrella, according to traders.

The bonds were also continuing to improve, as a trader said the 11 3/8% notes due 2014 gained nearly a point to end around "901/4-ish."

Another market source quoted the notes at 90 bid, 91 offered, up half a point to a point on the day.

There has been no real news out on the Miamisburg, Ohio-based papermaker since the company released new financial guidance for the third and fourth quarters of 2010. The better-than-expected forecast gave the bonds an initial boost, though they have been going back and forth ever since.

Traders and other market players are also wondering if the company will be able to hit its targets.

NewPage is estimating it will achieve third-quarter EBITDA between $90 million and $100 million, with a loss between $75 million and $85 million. For the fourth quarter, EBITDA is expected to be between $145 million and $165 million, with net loss coming in between $10 million and $35 million.

The company posted EBITDA of $10 million in the second quarter and a net loss of $174 million.

Market boosts Sprint debt

The positive tone of the market helped Spring Nextel notes add at least half a point to their value, according to market sources.

One trader said the 8¾% notes due 2032 closed half a point firmer at par ½ bid, 101 offered. Another source saw the 6% notes due 2016 at 96½ bid, also half a point better.

There was no fresh news out on the Overland Park, Kan.-based telecommunications provider.

Tribune creditors seek to sue

Tribune's bonds were suspiciously quiet as the company's creditors sought approval to sue owner Sam Zell and its shareholders.

"There wasn't a single trade," a source said.

The creditors are alleging that Zell and others "collectively caused massive damage" to the newspaper publisher when the company was taken private by Zell in a 2007 leveraged buyout valued at more than $8 billion.

The company then was forced into bankruptcy in December 2008.

However, the group said it does not intend to file any lawsuit while restructuring negotiations are ongoing. They said they only want to reserve the right to file in case talks fail.

The latest battle in the bankruptcy fight comes just over a month after a bankruptcy examiner released a report that claimed there was merit to a fraudulent transfer claim.

Blockbuster bonds steady

A trader said that Blockbuster Inc.'s 11 3/8% senior secured notes due 2014 were at 53 bid, which he said was not far removed from Friday's closing levels around 53 bid, 54 offered.

He said the Dallas-based movie-rental company's notes were trading flat, "of course," after the latest missed bond coupon payment, on its 9% notes due 2012. The company skipped the payment in order to comply with the terms of the company's forbearance agreement with most of its senior bondholders and on investor expectations of a possible bankruptcy filing soon.

Paul Deckelman contributed to this article

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