Distressed debt stays strong amid new issues, conference absences; trading picks up in Ply Gem

By Stephanie N. Rotondo

Portland, Ore., Sept. 15 - Distressed traders had a busy day of trading on Wednesday, though a fair few players were out attending the Credit Suisse 2010 Global Credit Products Conference in Miami Beach.

"The market continues its path of being firmer," a trader said, as another said nearly $2 billion in bonds changed hands in the secondary universe.

And the new issue craze remained in full effect.

"It's a reasonable expectation that everyone is going to focus on new issues," said one trader.

Companies were looking to raise money, he said - adding that a lot of it was being "issued to take out existing debt, so there's not a lot of new money at work."

Still, that also means that "a lot of this distressed stuff gets taken care of," he said, explaining the lack of excitement in the distressed space.

Distressed, another trader said, "is a problem. There's not much."

Among the day's notables, Ply Gem Industries Inc.'s debt saw a surge in activity. However, there was no news to explain the sudden interest.

There was also a lack of news from Blockbuster Inc. But that didn't stop the bonds from ending the day about a point higher - though they remained in the single digits.

But there was news out about AbitibiBowater Inc. The company announced a notes offering, the proceeds of which it intends to use for its bankruptcy exit. Even with that news, however, the bonds were unshaken.

Ply Gem gets a surge

A trader said "a bunch" of Ply Gem Industries' 11¾% notes due 2013 traded during the midweek session, though there was no news to act as a catalyst.

He said "$20-odd million" of the bonds changed hands around 106.

Another market source quoted the issue at 105½ bid, 106½ offered, up 1 to 1½ points on the day.

Ply Gem Industries is a Cary, N.C.-based building products manufacturer.

Blockbuster inches up

Blockbuster has yet to announce a bankruptcy filing, though it is believed to be imminent.

Still, that didn't stop the Dallas-based movie rental chain's debt from trading up on Wednesday.

A trader said the 9% subordinated notes "got as good as 7 bid," seeing the right side at 8.

He meantime quoted the 11 ¾% senior notes due 2014 at 53 bid, 53 offered.

"That's bounced a good way off their lows" in the 45-46 context, which he noted was "only a couple of weeks ago."

Another trader deemed both issues a point firmer, the subs at 7 bid, 9 offered and the seniors at 52 bid, 54 offered.

On Monday, Blockbuster said its chief financial officer, Thomas M. Casey, had voluntarily resigned on Sept. 7.

The resignation went into effect on Monday, and Dennis McGill stepped into the role.

Bonds unshaken by Abitibi exit

The announcement that AbitibiBowater had launched a private offering of $750 million in senior secured notes due 2018 - the proceeds of which are slated to be used to help fund the Montreal-based paper company's exit from bankruptcy - had little or no impact on the company's existing bonds, a trader said.

"That stuff is quoted," he said, "but I'm not seeing activity in that name."

He added that "by the amount [of quotes] I'm seeing here, I would be shocked if there was much trading in it - I'm not even seeing many quotes.

"When you only have a half a page [on Trace] of quotes, it's not an active name."

He said that "a bunch" of the outstanding bonds issued by the old Abitibi Consolidated Inc. before its merger in 2007 with Bowater Inc. were quoted around 9½ bid, 11½ offered, while the old Bowater bonds were seen around 23 bid, 25 offered.

NewPage active ... again

A large amount of NewPage Corp.'s 11 3/8% notes due 2014 turned over in trading, as has been the case of late.

Traders also saw the bonds moving up another point on the day.

One source pegged the paper around 92. Another said they were "probably 92 even," adding that a good market would be 91¼ bid, 92¼ offered.

NewPage might be getting close to unloading a shuttered Nova Scotia-based mill, according to news reports. The sale hinges on the results of a study that would project how much it would cost to convert the mill's machinery to produce different grades of paper. Local funding was provided to complete the study.

Miamisburg, Ohio-based NewPage has said it would not sell to someone it would have to compete with.

Memphis-based rival Verso Paper Co.'s 11 3/8% notes due 2016 were up by 1½ points to nearly the 89 level.

Paul Deckelman contributed to this report

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