MF Global unfazed by ex-CEO testimony; AMR in holding pattern; Sprint falls, Clearwire rises

By Stephanie N. Rotondo

Portland, Ore., Dec. 8 - Distressed debt was weakening toward the end of Thursday's session, according to a trader.

"It was strong early on," he said. "Then it got heavy with the stock market."

While volumes remained "decent," another trader noted that accounts were "giving excuses not to do anything." He opined that they were "winding down portfolios" going into year-end, though there was "more money being put to work on the buyside."

He further called the market "jittery," as people were averse to "taking too much risk."

In the news, Jon S. Corzine, the former head of MF Global Holdings Ltd., testified before a Congressional committee on Thursday. Despite that, a trader said the company's debt was not all that active and remained unchanged.

"More people [were] watching Corzine's testimony than trading those bonds," he said.

AMR Corp. was also holding its ground, though trading volume was significantly more than MF Global.

In the telecoms, Sprint Nextel Corp. was weakening even as Clearwire Corp. was gaining. The movements came after Clearwire upped the size of a stock offering.

MF Global hangs in

MF Global's 6¼% notes due 2016 were called down a touch at 33½ by one trader.

Another trader said "levels were unchanged," even as the bankrupt futures broker's ex-chief executive stood before a congressional panel on Thursday.

Corzine was questioned by the House Committee on Agriculture regarding the events that led up to the firm's Oct. 31 bankruptcy. Corzine was also questioned regarding hundreds of millions of dollars in missing customer funds.

"I simply do not know where the money is, or why the accounts have not been reconciled to date," Corzine said, according to the testimony.

AMR active, steady

Bankrupt AMR, the parent company of American Airlines, was deemed the day's most actively traded credit.

However, a trader said the 10½% notes due 2012 were unchanged around the 92 mark.

Another trader said the debt was "active but unchanged" in a 92-93 context.

At another desk, a trader said the subordinated notes, like the 9% notes due 2016, were trading around "22-ish."

The equity dropped back down today," he said. "That was where the action was."

The Fort Worth, Texas-based company's stock (NYSE: AMR) fell 36 cents, or 32.13%, to 76 cents.

Yet another trader said that AMR "seems like it's a popular [name] today, based on the amount of quotes.

He said that "a boatload" of 10½% notes traded, ending at 91½ bid, 92 offered.

"But there was good volume in that name."

A market source at another desk agreed with the latter point, estimating that over $20 million of the bonds traded, making the credit one of the most active among the junk issues.

Sprint falls, Clearwire rises

A trader saw Sprint Nextel paper declining by about half a point across the board.

He pegged the 6.90% notes due 2019 at 811/2, the 7 3/8% notes due 2015 at 89½ and the 6% notes due 2016 at 82.

Another trader also said the bonds were "down roughly half a point," seeing the 6.90% notes ending around 811/2.

Another market source saw the 6% notes falling 1½ points to 81½ bid.

Sprint's network partner Clearwire, however, was moving up, according to a trader.

He called the 12% notes due 2015 up a point at 93 bid, 93½ offered and the 12 % notes due 2017 up 1 to 2 points at 83½ bid, 84½ offered.

Late Wednesday, Clearwire said it was increasing the size of its public stock offering to $350 million from $300 million. The company will issue 175 million class A common shares at $2 per share.

Additionally, Sprint will purchase 172 million class B shares per its recently inked four-year funding agreement.

Clearwire is expected to use proceeds to build out its 4G network.

Elsewhere in the sector, Leap Wireless International Inc.'s 7¾% notes due 2020 were seen falling half a point to 811/2.

SuperMedia slips

SuperMedia Inc.'s term loan slid to 46½ bid, 48½ offered after bouncing around during the previous day's activity on buyback news, according to a trader.

On Wednesday, the loan went out at 47 bid, 49 offered, but had been as high as 48 bid, 50 offered immediately following the launch of a new $117 million cash-offer tender for the debt in a price range of 43 to 50. Lender responses to the tender offer are due by 3 p.m. ET on Tuesday.

Even with the decline after the initial run-up, the loan is still higher than the 45 bid, 46½ offered levels that were seen before the repurchase news emerged.

Last month, the company attempted a tender offer with the same cash offer size but a price range of 43 to 46, however, that offer was canceled because of insufficient interest.

SuperMedia, a Dallas-based directory publisher, has the ability to buy back the term loan borrowings at a price below par using up to $122.5 million of cash until Jan. 1, 2014 as a result of a recently completed amendment to its credit facility.

Sara Rosenberg and Paul Deckelman contributed to this article

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