Distressed debt trading slow amid new issue focus; NewPage ticks up on Rock-Tenn, Smurfit news

By Stephanie N. Rotondo and Paul Deckelman

Portland, Ore., Jan. 24 - Some distressed issues managed to steal the attention away from a continued focus on new issues in the secondary market on Monday, traders said.

NewPage Corp., for example, was one of the day's more active names. The bonds were up anywhere from half a point to over 2 points, depending on the issue, though there was no credit-specific news out. However, a proposed merger between Smurfit-Stone Container Co. and Rock-Tenn Co. might have helped the paper sector in general gain momentum.

The tender deadline for Dynegy Inc.'s proposed takeover by Carl Icahn is set to expire at midnight on Tuesday, but traders saw little goings-on ahead of the date. A few market players even opined that the deadline could be extended.

NewPage active, higher

A trader said NewPage's 10% notes due 2012 experienced "a good move," as the bonds closed 2½ points higher than last week's levels.

He said about $15 million to $20 million of the notes changed hands at 63 bid, 63½ offered.

The 11 3/8% notes due 2014 were meantime "not up near as much," gaining only about half a point to close around 991/4. He noted that about $10 million of the bonds turned over.

Another trader also pegged the 10% notes at 63 bid, 63½ offered.

"That's up a couple points," he said.

There hasn't been any fresh news out on the Miamisburg, Ohio-based coated papermaker since last week, when the company said it had amended its revolving credit facility to push out the maturity.

Still, one trader said that the paper sector was "the one space today that's probably worth talking about," based on the news that Rock-Tenn has agreed to buy Smurfit-Stone Container for $3.5 billion and will assume some $700 million of Smurfit-Stone net debt and $1.1 billion of pension liability.

"They had a good day" following news of the deal he said, quoting NewPage's 10% notes up 2 points on the day to 63 bid, 64 offered. "It really helped that space move up."

A second market source called the NewPage 10% notes up 2 points on the day, at 63 bid, while seeing the company's senior secured notes due 2014 nearly a point better, at 99¾ bid.

Smurfit-Stone moves up

As for Smurfit-Stone, a trader said that its bond debt had been reduced to just a few stubs left over following the bankruptcy, from which Smurfit-Stone emerged last July. All were just trading in the mid-single-digits. One was the remnant of its 7 3/8% due 2014. He said there were also remnants of its former 8¼% and 8 3/8% notes due 2012, its 7½% notes due 2013 and 8% notes due 2017. "There are various coupons - but they all trade similar."

He said that they had traded in a range of 6¼ to 6¾ "all day long," but then moved up to around 7 toward the end of the day, "up like 1½ points after the deal was announced." He said there "probably a decent amount of trading in those today on the news - a lot of, lot of trading" in that 6-handle context all day. "Then they went a little higher," to trade in a context of 6½ to 71/2, with a few trades around 7 bid going out.

He meantime saw the company's bank debt around 100¾ bid, 101¼ offered.

Catalyst firms on news

With the whole of the paper space better on news of the Smurfit-Stone deal with Rock-Tenn, a trader said that Catalyst Paper Co.'s 7 3/8% notes due 2014 had moved up to 83 bid, 84 offered, up from their recent levels around 80-81.

Last week, Catalyst's bonds - which had firmed to around the mid-80s from around 80-81 before on the company's recent announcement of a smallish bond redemption slated for next month - gave up all of those gains and sank back down to around the 80 area.

Another trader quoted Richmond, B.C.-based Catalyst's 11% senior secured notes due 2016 up a point at 101¼ bid, 102 offered, while seeing the 7 3/8s a half-point better at 83. "The bigger ones, the 11s, are a little more active," he said.

Dynegy mixed as takeover looms

Dynegy debt ended Monday's session flat to down a tad, according to traders.

One trader saw the 8 3/8% notes due 2016 at 79¼ and the 7½% notes due 2015 at 811/2.

Another trader echoed those markets, adding that the issues were down a quarter point, though on "only a couple trades."

But another market source said the 7¾% notes due 2019 moved up half a point to 72½ bid.

Carl Icahn's $5.50-per-share bid for the Houston-based power producer is set to expire tomorrow. Several analysts - including Julien Dumoulin-Smith, a New York-based analyst for UBS AG - believe that Icahn will extend the deadline, especially as Dynegy's stock price is currently trading above the bid price.

Icahn's proposal gives him the option to extend the offer to as late as Sept. 15.

Seneca Capital is opposing the deal, calling it undervalued. Seneca had previously sided with Icahn when Icahn opposed a prior takeover bid by Blackstone Group.

Icahn needs over 50% of shareholders to approve his offer in order for it to take effect.

Topical names drift lower

Recent topical traders in the distressed market - such as Harry & David Holdings Inc. and OPTI Canada Inc. - were seen on the weaker side by the end of Monday business.

A trader said Harry & David's 9% notes due 2013 "slid down a little bit" to 42 bid, 43 offered.

"But not near as many people seem to care," he said, referring to the active dealings seen last week on news the company had hired financial advisers and was considering its recapitalization options.

Another trader said OPTI bonds were down another point, the 7 7/8% notes due 2014 at 65 1/8 and the 8¼% notes due 2014 at 651/4.

Nebraska Book Co. Inc.'s 8 5/8% notes due 2012 were seen at 85 offered, though a trader said there was no trading in the credit.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.