Distressed arena squeezed by stock market losses, Egypt plight; OPTI loses ground, stays busy

By Stephanie N. Rotondo

Portland, Ore., Jan. 28 - Declines in the equity markets and concerns about the turmoil brewing in Egypt resulted in a "generally blah day" for distressed debt, a trader said Friday.

"It's the same general themes over and over again," he said, as OPTI Canada Inc. continued to dominate trading and other recent market mainstays like NewPage Corp. and Catalyst Paper Corp. remained topical.

"With the stock market getting killed...people are kind of keeping their heads down and doing nothing," he said.

Another trader said the stock market squeeze brought "a little bit of weakness, a little bit of profit taking" in the distressed space.

That profit taking might have also been the cause - or at least part of it - for losses in Clear Channel Communications Inc.'s bonds. The trader also noted that the company recently made an interest payment in kind, meaning there was no accrued interest trading on top of the notes.

OPTI drops, active trading

A trader said OPTI Canada debt was the "most active again," continuing the bonds' trading streak.

"It is amazing that it's managed to be this active for this many days," he said.

He called the 7 7/8% and 8¼% notes due 2014 a couple points softer at 60 bid, 60½ offered.

The 9% notes due 2012 were pegged at 98 bid, 99 offered. That was about unchanged on the day, but down from 101 bid, 102 offered just two weeks ago, the trader said.

The 9% notes, the trader remarked, were "more interesting" given "that they have come off." Inside the capital structure, those bonds should be well covered in the event of a bankruptcy he said.

"At worst case, they should be par bid, 101 offered," he said.

At another desk, a trader deemed the 7 7/8% and 8¼% notes weaker, closing around 60.

OPTI Canada is a Calgary, Alta.-based oilsands producer.

Clear Channel falls

Clear Channel Communications was also on the weak side, according to traders.

One trader saw the 11% notes due 2016 at 91½ bid, 92 offered and saw "a lot of one-off prints" in the company's other issues.

The trader added that the decline in the bonds was due in part to a PIK payment on the 11% notes - so there is no accrued [interest anymore]" - and in part to "probably some profit taking, given the state of the equity markets."

Another trader placed the 11% notes at 91 7/8, which he called 1½ points lower on the day.

Clear Channel is a San Antonio-based multimedia company.

Paper bonds soften

In the paper sector, NewPage's 10% notes due 2012 were deemed "about unchanged, maybe slightly weaker" by a trader.

He pegged the issue around 65.

The trader also saw Catalyst Paper's 7 3/8% notes due 2014 ending around 87, which he said was "marginally weaker."

Another trader said NewPage's 10% notes were active, but unchanged at 64½ bid, 65 offered. The 11 3/8% notes due 2014, however, were up a bit around 101.

GM debt, stock dip

A trader said General Motors Corp.'s benchmark 8 3/8% notes due 2033 were "down a good bit" as the bonds were "taking their cue from the stock."

He said the stock was down over $2 "on the heels of Ford [Motor Co.'s] disappointing earnings."

He quoted the bonds at 35½ bid, 35¾ offered.

The stock (NYSE: GM) fell $2.07, or 5.35%, to $36.60.

GM is a Detroit-based automaker.

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