NewPage slips as coupon looms, Catalyst higher; Sino-Forest rallies; broad market mostly firm

By Stephanie N. Rotondo

Portland, Ore., June 22 - Distressed debt ended the midweek trading session mostly firmer, though a trader noted that "the market is nervous."

"It seemed kind of quiet but there was decent volume," he added. Many market watchers were focused on the Federal Reserve's statement that came out Wednesday, in hopes that it would provide some sort of direction.

But while the rest of the market gained, NewPage Corp. saw its bonds slipping as concerns about an upcoming coupon grew. Additionally, Catalyst Paper Corp.'s debt moved higher, an attempted recovery after the company said it had hired advisors to look over its financial alternatives.

Meanwhile, Sino-Forest Corp.'s bonds rebounded a few points, though trading had quieted down considerably after Tuesday's rollercoaster.

NewPage slips, Catalyst gains

A trader said NewPage was the "name du jour," as the papermaker's bonds ended the day weaker.

He pegged the 11 3/8% notes due 2014 at 91 bid, 91½ offered and the 10% notes due 2012 around the 27 mark.

"I think there was some industry data that was weak," he said. "It didn't bode well for anything in that space."

At another desk, a trader saw the 11 3/8% notes falling a point to close around 91 and the 10% notes dropping nearly 3 points to finish around that 27 level.

Another trader said that "the biggest loser - or at least the most active - was NewPage."

He saw the Miamisburg, Ohio-based coated-paper manufacturer's 11 3/8% first-lien senior secured notes down three-quarters of a point, at 91¼ bid, but saw its 10% second-lien secured bonds due 2012 down almost 4 points on the day, at 27.

NewPage has been succumbing to pressure, as investors worry about an upcoming $100 million coupon payment on the 11 3/8% notes. The company has already hired advisors to help it develop a restructuring plan, but there has been no word on how that is going.

The interest payment comes due June 30.

But the paper industry in general is suffering. Sector peer Catalyst Paper said Monday it had hired UBS Securities to help "address its capital structure," specifically the $250 million issue of 7 3/8% notes due 2014.

"With the recently announced extension and amendment of our asset based lending facility, the next step is to identify appropriate opportunities to improve our balance sheet," said Brian Baarda, Catalyst's chief financial officer, in a statement.

A trader said Catalyst's 7 3/8% notes were "kind of unchanged " around 611/2. Another trader saw the issue at 61½ bid, 62 offered.

"I guess that is up a little bit," the second trader said, noting that the debt had been around 60½ on Friday and in the high-50s prior to that.

Sino-Forest quieter, better

After experiencing wild gyrations during Tuesday trading, Sino-Forest's debt was "kind of quiet" and a few points higher, according to a trader.

"They melted down obviously yesterday," he said, referring to a 10-plus point decline in both the 10¼% notes due 2014 and the 6¼% notes due 2017 on news that hedge fund Paulson & Co. had divested its entire stake in the Chinese-Canadian timber company. "They probably rebounded a couple points today."

He placed the 6¼% notes "close to 40."

Broad market mostly higher

Among other distressed issues, Caesars Entertainment Corp.'s 10% notes due 2018 were deemed "basically unchanged" at 89.

Rite Aid Corp.'s 9½% notes due 2017 meantime gained almost a point to close around 881/4, a trader said. The drugstore chain is slated to release quarterly results on Thursday.

And, Clear Channel Communications Inc.'s 11% notes due 2016 inched up a point to close at 863/4.

Paul Deckelman contributed to this article

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