Nortel notes continue run-up; National Bank of Greece preferreds plummet; Capmark debt firms

By Stephanie N. Rotondo

Portland, Ore., July 6 - Nortel Networks Corp. was Wednesday's nom du jour, as investors continued to push the company's debt higher.

The gains that started before last week's patent portfolio auction have only increased since the company announced the winning $4.5 billion bid. The higher-than-expected price has led many to believe that bondholders would receive 100% recovery.

Meanwhile, it was exactly the opposite for National Bank of Greece SA. The company's preferreds lost more than 10% of their value during the day's session, even as the bank's chairman said he would support a rollover of the country's sovereign debt.

Elsewhere in the financial space, Capmark Financial Group Inc.'s debt inched up, according to a trader. He speculated that the gains were due to the belief that the company's bankruptcy case was nearing its end.

Also, NewPage Corp.'s subordinated debt took a hit in trading, though there was no fresh news out to explain why.

Nortel pops again

A trader said Nortel Networks was the "only name of interest" in Wednesday's session.

"That was the big active gorilla name," he said, seeing the 10 1/8% notes due 2013 and the 10¾% notes due 2016 closing around 107 bid, 107½ offered.

"They did pop a little bit," another trader said. He said the 10¾% notes were the "biggest trader of the day," with the paper opening around 105 bid, 106 offered and moving as high as 109 bid before settling back in at 106¼ bid, 107¼ offered.

The bonds have been on the climb since last Monday, when the Toronto-based bankrupt telecommunications products company began an auction for its patent portfolio. Late Thursday, Nortel finally announced the winner, which was a $4.5 billion bid from a consortium that included Apple Inc. and Microsoft Corp.

Google Inc. made the original "stalking horse" bid of $900 million earlier this year.

With the auction garnering much more than anticipated, bondholders are now thinking they could recover 100% of their claims.

"I think that's a definite," a trader said. Pre-petition recovery of 100% would value the bonds around 105, he explained. Post-petition recovery increases that value to around 130.

Still, the sale has some obstacles to overcome. Canada is reviewing the sale to see if it falls within the realm of the Investment Canada Act. The U.S. Department of Justice has also been asked to look into the sale for antitrust concerns.

Greek bank plummets again

National Bank of Greece's 9% series A preferreds (NYSE: NBGPA) were unusually active, as Greek banks came out in support of debt rollover plan that could help keep the beleaguered country from a default.

But while the preferreds were active, they were also more than 10% weaker.

The shares fell $0.95, or 11.18%, to $7.55. Volume was nearly 450,000 shares.

Vassilis Rapanos, head of the Greek banking association, as well as the chairman of National Bank of Greece, seemed positive when giving a statement at a meeting in Paris, Reuters reported.

"We will support the state in the giant effort to save the country and put it on a growth path," Rapanos said. "I believe that negotiations currently under way will have a positive outcome."

Capmark heads higher

A trader said Capmark Financial Group's debt traded up "a little bit" to around 59.

"It's getting closer to distribution," he said, referring to the company's bankruptcy case, which appears to be nearing its end.

Also in the financial space, Lehman Brothers Holdings Inc.'s bonds were deemed "kind of the same" at "261/2-ish, give or take."

NewPage subs sink

NewPage's 10% notes due 2012 were "getting hammered," a trader said, though he declined to give any markets in the bonds.

Another trader said the issue opened around 30½ bid, 31 offered, but closed closer to 271/2.

There has been no news out since last week, when the Miamisburg, Ohio-based papermaker said it had in fact made its coupon on the 11 3/8% notes due 2014. However, the company is working with advisors to develop a restructuring plan, as it is required to repay or refinance the 10% notes before the end of this month in order to avoid the acceleration of other debt.

Nebraska Book slips

A trader saw Nebraska Book Co. Inc.'s 10% notes due 2011 end around 991/2, "maybe down a scrap, but not much."

He pegged the 8 5/8% notes due 2012 at 751/2.

Nebraska Book is a Lincoln, neb.-based textbook distributor.

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