Caesars bonds weaken with market; PMI notes hold firm on bankruptcy filing; broad market slips

By Stephanie N. Rotondo

Portland, Ore., Nov. 23 - The distressed bond market was "heavy in general," a trader reported Wednesday.

"A lot of people are out [for the Thanksgiving holiday], so there is very little liquidity," another trader said. "There's no flow to trading."

Caesars Entertainment Corp.'s debt was on the decline, in relatively active trading given the overall muted volume.

"The whole structure was weaker," a trader said.

Meanwhile, PMI Group Inc. announced it had filed for bankruptcy Wednesday after Arizona state regulators seized its main operating unit last month. However, a trader said there was little movement in the bonds.

Caesars' debt declines

Caesars Entertainment's 10% notes due 2018 were down 1 to 2 points on the day, trading in a range of 58 to 61, according to a trader.

Another trader deemed the debt down a point at 59 bid, 60 offered, versus 60 bid, 61 offered previously.

There was no fresh news out on the Las Vegas-based casino operator. However, last week, the company renewed its plans to launch an initial public offering.

Caesars had attempted to do the IPO around the same time last year, but delayed it due to poor market conditions. A recent uptick in IPOs has reportedly prompted the company to try again.

Still, the amount of the IPO was altered drastically. Originally, Caesars had sought as much as $532 million via the stock sale. The new plan calls for only $50 million of stock to be sold.

"It's a tiny little sliver of equity," a trader said. "I'm not sure it matters much, as this company just has so much debt."

Among other casino credits, Marina District Finance Co., a unit of Borgata Hotel Casino & Spa, saw its 9 7/8% notes due 2018 drift down a deuce to 86, according to a trader.

PMI files, bonds steady

Walnut Creek, Calif.-based mortgage insurer PMI Group said Wednesday that it had voluntarily filed for Chapter 11 protections in order to preserve value for its stakeholders.

The filing comes a month after Arizona state regulators seized the company's main operating unit.

But a trader said the news "had no effect on the bonds. I think it was already factored in."

The trader pegged the debt at 23 bid, 24 offered. The bonds tend to trade on top of one another.

Because of the bankruptcy filing, PMI said that $685 million of its senior unsecured notes and about $51.5 million of junior subordinated unsecured notes have become due and payable. Noteholders' rights to seek a remedy have been stayed due to the filing.

Broad market tidbits

Elsewhere in the distressed realm, a trader said Sears Holdings Corp.'s 6 5/8% notes due 2018 had dropped over a point to end around 763/4.

Another trader said MF Global Holdings Ltd.'s 6¼% notes due 2016 were "a little stronger," hitting as high as 35.

And, buyers continued to seek Lehman Brothers Holdings Inc. paper, the said. The bonds were steady at 251/2, "but pretty strong bid."

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