Sprint investors push bonds down, seek new paper; MF Global debt declines; Dynegy quietly dips

By Stephanie N. Rotondo

Portland, Ore., Nov. 7 - Distressed bonds ended Monday's session mostly flat, according to a trader.

He noted that bonds had been "a little heavy" earlier in the day, when the stock market hit its intraday low. As equities then rallied modestly, "bids kind of filled in."

Bond investors were focusing primarily on new issues, another trader noted. That included a new two-tranche issue from Sprint Nextel Corp. that came Friday.

"That was getting all the attention," the trader said.

But as investors dumped old debt for new, Sprint's capital structure finished up mostly lower.

Also lower were MF Global Holdings Ltd.'s bonds. It was reported Monday that a bulk of the now-bankrupt futures broker's European positions were still open, causing confusion and irritation among investors.

Rumors were circulating that Dynegy Inc. was preparing its Dynegy Holdings LLC unit for bankruptcy. However, the news was not doing much to move the unit's debt.

Sprint weakens on new issue

Sprint Nextel investors were dumping some of their old holdings to get into the company's recently priced new issue, traders reported.

That resulted in modest losses for the older debt, a trader said.

He called the 6% notes due 2016 down over a point at 861/2, while the 8 3/8% notes due 2017 fell a point to 91.

However, he saw the 6 7/8% notes due 2028 rising a point to end around 74.

At another desk, a market source pegged the 6% notes up a quarter-point at 88 bid.

Yet another trader saw the 6% notes closing down 1 point, at 86½ bid, 87¼ offered, on "a lot of volume."

The trader also saw Sprint's majority-owned Clearwire Corp. unit's 12% subordinated notes due 2017 at 58-61, which he called up 1 point. The two issues of 12% notes due 2015 ended at 84-86, where they were earlier in the morning.

"So for the most part," he opined, "they're pretty much unchanged. They were quoted all day long - but how much they traded, I don't know."

The new issues - $3 billion of 9% notes due 2018 and $1 billion of 11½% notes due 2021 - were trading in a 101-102 context, according to another trader.

The Overland Park, Kan.-based wireless telecommunications services provider launched the new issue in order to help cover a funding shortfall of $5 billion to $7 billion. A portion of the proceeds will be used to take out debt that matures in the next few years, as well as to help network partner Clearwire build out its network.

Sprint might also use the funds to help build its own network.

MF Global loses ground

MF Global Holdings, the New York-based futures broker that filed for bankruptcy last week, saw its bonds continue to lose ground.

A trader quoted the 6¼% notes due 2016 at 37 bid, 38 offered, down from 40 bid, 41 offered on Friday.

Another trader also saw the debt "a couple points lower," trading around 38.

The brokerage has been attempting to transfer client accounts since its Chapter 11 filing on Oct. 31. However, the process has been slow-going and has left many European positions open.

Meanwhile, some accounts have also been faced with higher margin calls.

Dynegy quietly dips

Dynegy Holdings is reportedly in talks with lenders on a potential prepackaged bankruptcy filing.

One trader said he heard the filing could come overnight. There could be a sense of urgency at the holding company of Dynegy Inc., given that it has $82 million in lease payments due Tuesday.

The unit missed a coupon last week on its 8 3/8% notes due 2016. The parent company also scrapped a $1.25 billion debt exchange, due to disappointing interest in the swap.

Still, the potential filing news was not causing much movement in the Houston-based power producer's debt.

One trader placed the 7 1/8% notes due 2018 and the 7 5/8% notes due 2026 at 641/2, calling the former issue down 2½ points.

If Dynegy Holdings does file, the parent company will not be affected, news reports indicated.

Paul Deckelman contributed to this article

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