Traders see muted volumes post-quake; Caesars loses ground; GM debt slides; Edison shaken up

By Stephanie N. Rotondo

Portland, Ore., March 14 - While the overall market was reeling from Japan's 8.9 magnitude earthquake Friday, a trader said that the distressed debt market was seeing more subtle effects come Monday.

"It didn't freak out in the sense that prices are actually coming back," he said. "But nobody wants to do anything. Nobody wanted to sell into weakness but by the same token, nobody wanted to buy."

However, total trading volumes in the secondary space - which also includes high-yield bonds - were severely depressed, with only about $800 million trading.

"That's horrendous," said another trader.

But one trader speculated that it wasn't just Japan that was creating the problems, but also the fact that it was a Monday and that some schools were on vacations.

"In general, the tone was a little bit weaker, though not all that active," he said.

Of the day's muted activity, Caesars Entertainment Corp. got knocked down a bit, though there was no news out to cause the move. General Motors Corp. was also weaker, trending in line with its common stock.

In quake-related losses, Edison International's bonds got "crushed," but then "bounced," according to a trading. Still, the debt was up only fractionally on the day.

Hawker Beechcraft Acquisition Co. was a credit on the losing side of the spectrum, while NewPage Corp. continued to hold its ground.

Caesars notes slip

Caesars Entertainment - more commonly referred to by its former moniker, Harrah's Entertainment - saw its 10% notes due 2018 losing ground, though on no news.

One trader said the paper was a point softer at 89¼ bid, 89½ offered. However, he said there "wasn't that much volume" in the credit, with only about $10 million of the company's assorted issues trading.

Another market source called the 10% notes 1½ points lower at 89½ bid, while another placed the paper at 891/4.

Caesars is a Las Vegas-based casino and hotel operator.

GM bonds, equity down

Detroit-based automaker General Motors saw its debt continuing to slide, trending in line with the company's New York-Stock Exchange-listed stock.

A trader said the benchmark 8 3/8% notes due 2033 were "still falling," ending around 30. The 7 1/8% notes due 2013 were meantime "kind of unchanged" around 29.

Another trader pegged GM's 8 3/8% notes at 29½ bid, 39 offered.

The stock (NYSE: GM) fell 34 cents, or 1.06%, to $31.59.

GM's bankruptcy plan was confirmed March 3. The old bonds - placed under the Motors Liquidation Co. banner upon the company's 2009 bankruptcy filing - will be converted to equity, though it is not clear at this time how much stock bondholders will receive.

The conversion of debt to equity is expected to be completed by the end of June.

Quakes shakes up Edison

A trader said Edison International's 7% notes due 2017 got "crushed" to 72 before "bouncing" back to 75 bid, 75¼ offered.

He said that was only about half a point better on the day.

The 7½% notes due 2013, however, traded up almost a point to 973/4.

Investors were reacting to the Japanese earthquake that sent tsunami warnings all up the West Coast of the U.S.

Edison, based in Rosemead, Calif., said its San Onofre nuclear plant was operating safely after the warnings on Friday.

However, the company and a portion of its plants reside in California, which is situated along a major fault line.

Hawker debt dips

Hawker Beechcraft notes were lower on the day, according to market sources.

One trader saw the 9¾% notes due 2017 slipping half a point to 731/4. Another deemed the 8½% notes due 2015 down a deuce at 87½ bid.

Hawker Beechcraft is a Wichita, Kan.-based aircraft manufacturer.

NewPage steady to softer

NewPage's 10% subordinated notes due 2012 continued to be somewhat active - given the thin volumes of the day - and about unchanged, traders reported.

One trader said the 10% notes fell half a point to 661/4, while another said the notes were steady at 66.

There was no news out on the Miamisburg, Ohio-based coated papermaker.

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