Harrah's gains on loan change news; KV Pharma trading volatile; Catalyst slips, NewPage mixed

By Stephanie N. Rotondo

Portland, Ore., May 4 - It was a "different world" in the distressed debt market Wednesday, as traders saw more volume across a more varied selection of credits.

"I think the bond market definitely outperformed the stock market," a trader said.

Caesars Entertainment Corp.'s debt got a boost on news the company was looking to extend the maturities of some of its bank debt. The bonds have been trading actively all week, but Wednesday was the first day the bonds moved around on the news.

Meanwhile, KV Pharmaceutical Co. remained a volatile name, a market source said. Health care providers are continuing to fight the company over its Makena drug, which many have claimed is too expensive.

The paper sector was widely mixed, though with no news to drive it, traders said. Catalyst Paper Corp. ended the day weaker, while rival NewPage Corp. closed mixed.

Harrah's gets a boost

Caesars Entertainment's 10% notes due 2018 were "one of the biggest traders" of the day "on the back of their amend and extend" news, according to a trader.

He said that while all of the Las Vegas-based casino operator's bonds were up "a solid point across the board," the 10% notes were by far the most active, with over $100 million changing hands.

"There was definitely some good action," he said, pegging the paper at 95, up from 93½ on Tuesday.

Another market source deemed the debt up nearly a deuce at 95¼ bid.

Meanwhile, the term loans B-1, B-2 and B-3 moved to 94 bid, 94½ offered, from 93¾ bid, 94 offered after word of an amendment-and-extension proposal hit the market, a trader said.

Caesars is looking to extend the maturities of its senior secured B1, B2 and B3 loans by three years to January 2018. In exchange for the amendment, the company is offering to pay higher interest rates.

Additionally, the company wants to convert about $816 million of its revolving credit facilities to term loans. If lenders want to keep the revolver, Caesars is asking to extend the maturity one year to January 2015.

KV Pharma volatile

There was "more volatility" in KV Pharmaceutical's debt, according to a market source.

"There was a little bit more up and down in those bonds," the source said, seeing the 12% senior secured notes due 2015 at 86 bid, 88 offered and the 2½% convertible notes due 2033 at 60 bid, 63 offered.

The source said there has been more and more news out on the Bridgeton, Mo.-based company regarding its drug Makena, which was approved by the Food and Drug Administration in February.

The drug is supposed to prevent pre-term birth.

However, the source said, "Disgruntled doctors are trying to discredit the drug," which has come under fire for its expensive price tag. The company has already once reduced the cost from $1,500 per injection to $590 per shot.

But health care providers are still objecting to the price, especially as a cheaper version - called 17P - is available and provides the same benefit.

Catalyst dips, NewPage mixed

In the paper space, Catalyst Paper's 7 3/8% notes due 2014 were a couple points weaker, according to a trader.

He saw about $20 million to $25 million of the notes turn over at 67 bid, 68 offered.

Sector peer NewPage meantime saw its 11 3/8% notes due 2014 end unchanged around par, while its 10% notes due 2012 slipped slightly to 59.

The trader said about $10 million to $15 million of the 10% notes traded.

The trader also saw the floating-rate notes due 2012 closing a bit higher around 55, on "$20-odd million" traded.

There was no fresh news out on either Richmond, B.C.-based Catalyst or Miamisburg, Ohio-based NewPage.

Lyon, AES weaker

William Lyon Homes Inc.'s 10¾% notes due 2013 were seen down 12 points on the session at 55 bid. There was no fresh news out on the Newport Beach, Cal.-based homebuilder.

AES Eastern Energy's 9.67% bonds due 2029 dropped a point to just over 70. Earlier this year, parent AES Corp., the big Arlington, Va.-based global power producer, announced plans to sell the struggling AES Eastern, which own four coal-fired power plants in New York State.

Sara Rosenberg and Paul Deckelman contributed to this article

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.