Caesars paper gyrates on weak gaming report; Hovnanian still haunted by earnings; NewPage dips

By Stephanie N. Rotondo

Portland, Ore., June 9 - The distressed debt market was largely mixed Thursday, though a positive day for the equity market did help some things to firm, traders reported.

The market was "a little better today," a trader said. "Things firmed."

With record-breaking temperatures expected in New York and the Jewish holiday Shavuot taking place, some desks were vacant for at least half of the day.

"It was a little noisier in the morning," another trader said. But by mid-day, "It was like someone set off the whistle. All of a sudden it got really quiet."

Caesars Entertainment Corp. gyrated some throughout the day, following the release of Nevada's gaming results for April. Traders saw the bonds closing unchanged to a point weaker.

Elsewhere, poor earnings out earlier in the week continued to push Hovnanian Enterprises Inc.'s debt lower. New Page Corp. was also on the losing side, though with no news to drive the paper down.

OPTI Canada Inc. has a coupon payment looming and a trader said the subordinated debt was retreating on speculation that the payment might not be made.

Clear Channel Communications Inc. priced its add-on deal to its 9% notes due 2021 early in the day. The new paper quickly headed for higher ground, but as a result, weighed on the rest of the company's bonds.

Caesars falls post-report

Caesars Entertainment's benchmark 10% notes due 2018 fell as much as a point on the day in the wake of a weak monthly gaming report from the Nevada Gaming Control Board.

A market source deemed the debt a point softer at 88½ bid.

But another trader said the issue "looks unchanged" around 891/2.

A third trader also said the notes were "about unchanged" at 89¼ bid, 89¾ offered.

In April, Nevada casinos took in $806 million, down from $810 million the year before. However, tax revenues increased 7.3% to $42.6 million.

On the Las Vegas Strip, casino intake fell 2.2% to $427.5 million. In March, revenues experienced a double-digit gain.

Caesars is a Las Vegas-based casino operator.

Hovnanian still weak

Hovnanian Enterprises' debt continued to weaken in response to its dismal earnings reported earlier in the week, according to traders.

One trader called the 10 5/8% notes due 2016 over a point lower around 981/4. Another source also pegged the paper around that level.

A third source quoted the notes at 98¼ bid, 98¾ offered, down from 99 bid, 99 3/8 offered.

On Tuesday, the Red Bank, N.J.-based homebuilder posted a net loss of $72.7 million, or 69 cents per share, for the three months ending April 30. That compared with a loss of $28.6 million, or 36 cents per share, the year before.

Analysts polled by Bloomberg had anticipated an average loss of 55 cents per share.

Revenue dropped to $255.1 million from $318.6 million and net orders fell 17% to 1,166 new homes.

Gross margin came to 14.8%, down from 17.3%.

NewPage loses steam

A trader called NewPage's 11 3/8% notes due 2014 "active" during Thursday session, and a half-point lower.

He saw the bonds close around the 95 mark.

Another trader called the issue 94¾ bid, 95¼ offered. He also saw the 10% notes due 2012 "down a couple points" at 38¾ bid, 39½ offered.

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

In other forest-products related credits, Sino-Forest Corp.'s 6¼% notes due 2017 fell a point to end around 56, a trader said.

OPTI debt pressured

OPTI Canada's subordinated debt continued to languish around its recent lows, according to a trader.

He placed the 7 7/8% and 8¼% notes due 2014 around the 43 level.

The trader said that Friday was the record date for an upcoming coupon payment on the debt. He said the weakness in the credit was due to "speculation about whether or not the payment will be made."

The coupon is due June 15. The bonds will be callable Dec. 15 at $102.06.

OPTI is a Calgary, Alta.-based oilsands producer.

Clear Channel add-on prices

Clear Channel Communications priced a $750 million add-on to its 9% notes due 2021 on Thursday at 93.845.

A trader said the 9% notes were "the big bond of the day," as the debt traded up to close at 95¾ bid, 961/2.

Another trader said the 9% notes instantly traded up to 95 and then "sort of crept up" to 96 bid, 96 ½ offered.

"They had to price it really cheap to get it out the door," he said.

But while the add-on deal was performing well, the rest of the San Antonio-based multimedia company's debt structure slipped.

A trader said the 11% notes due 2016 were "really active" and down about a quarter-point to 903/4. The 10¾% notes due 2016 meantime lost 1½ points, finishing around 911/4.

Greek bank sinks again

National Bank of Greece SA's series A preferreds (NYSE: NBGPA) fell 57 cents, or 5.11%, to $10.58.

The preferreds sunk yet again as the country of Greece was once again in headlines, as the European Union and International Monetary Fund estimated that the country could need as much as $65 billion more in loans to avoid a default.

The EU and IMF are currently considering an expanded aid package for the country, which could include a rollover of the government's debt at maturity. However, such a proposal would still be considered a credit event, according to Moody's Investors Service analyst Bart Oosterveld. A default would still occur as the rollover would and could not be considered truly voluntary.

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