Dynegy debt finds higher ground with no news out; NewPage action dwindles, bonds end mixed

By Stephanie N. Rotondo

Portland, Ore., April 26 - Distressed debt trading continued to lag as investors sought new issues or higher-quality paper, traders reported Tuesday.

Still, the market was mostly firm on the day. But while sources said there were better buyers in the market, sellers continued to be absent.

"There is not as much going on in the secondary market," a trader said. "Everybody is waiting for this flurry of new issues to price."

"Everyone is bracing themselves for the new issues that are coming," said another trader.

Dynegy Inc. saw its bonds gaining ground, through on no fresh news. NewPage Corp. - which, like Dynegy, recently said it had hired restructuring advisors - was meantime mixed and trading volume was significantly less than it has been of late.

Dynegy debt gains

A trader said Dynegy's debt was up a point across the board, though there was no fresh news out on the Houston-based power producer.

He saw the 8 3/8% notes due 2016 at 85¾ and the 7½% notes due 2015 at 861/2.

Another source placed the 7¾% notes due 2019 at 771/4, up a half.

A third trader said the 8 3/8% and 7½% notes were both a point better, at 85½ bid, 86 offered and 861/2, respectively.

Earlier in the month, Dynegy said it had hired Lazard Ltd. and the law firm of White & Case LLP to advise it on debt restructuring and possible asset sales. The hiring came just over a month after the company warned that a bankruptcy filing might be imminent if it could not get its finances in order.

NewPage action dwindles

After spending many recent sessions as the top trading credit, there was "not many bonds trading" under the NewPage moniker, a trader said.

He called the 10% notes due 2012 unchanged at 59 bid, 59½ offered. The 11 3/8% notes due 2014 were about half a point weaker at 983/4.

Like Dynegy, NewPage is also looking to restructure with the help of Lazard. The company announced it had hired the advisors not long after it said that its chief financial officer had resigned to pursue other opportunities.

The CFO's resignation marks the fourth executive departure in less than a year.

NewPage is a Miamisburg, Ohio-based coated papermaker.

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