NewPage declines in weaker market; Kodak debt falls; Sears cut deeper into junk, bonds unfazed

By Stephanie N. Rotondo and Paul Deckelman

Portland, Ore., July 18 - Overseas concerns continued to put pressure on the distressed debt market Monday, according to traders.

"The market came in a little bit with all the overseas stuff, but not really," a trader said. The bigger issue, he continued, was a lack of real volume, as investors instead focused on the equity markets.

NewPage Corp., however, continued to be an actively traded credit. The papermaker's debt declined with the rest of the market.

Eastman Kodak Co. was also softer, though there was no fresh news out to explain the move.

On the other hand, Sears Holdings Corp. paper was not much changed - or much traded - following news of a rating downgrade by Moody's Investors Service.

NewPage loses ground

NewPage's 10% second-lien notes due 2012 had "a bunch of trades," according to a trader.

He saw the paper falling to a 191/2-21¾ context from levels around 22-23 towards the end of last week.

"So they breached 20 at some point during the day," he said.

The 11 3/8% notes meantime traded with a 90-handle, he said, and also made the day's top five most active list.

Earlier this month, NewPage got a reprieve after saying it would make a $100.7 million coupon on its 11 3/8% first-lien notes. That helped the Miamisburg, Ohio-based papermaker regain some lost ground.

But the company is not yet fully out of the woods: It still has to repay or refinance the 10% notes before the end of the year in order to avoid the acceleration of other debt.

NewPage is working with advisors to develop a restructuring plan.

Kodak debt weakens

Eastman Kodak paper was weaker, though trading was thin and mostly in odd-lot trades.

One market source deemed the 7¼% notes due 2013 down 2 to 3 points at 82 bid, 83 offered. Another pegged the notes at 85½ bid, down about 3 points.

Another source saw the bonds fall into the lower 80s, from levels on Fridays in the upper 80s.

"Yep, quoted lower," he said, pegging the bonds at 82 bid, 83 offered, which he said was down "a couple of points" from around an 84-85 context in the morning - and that, in turn, was off from 87 bid, 88 offered on Friday.

"There were a lot of quotes on Eastman Kodak today." He said that since the bonds were down 2 or 3 points from the morning levels, and those were below Friday's "so they're down even lower," estimating the overall loss at about 4 or 5 points.

He also noted that "the stock seemed like it got beat up today too," with the New York Stock Exchange-traded shares falling by 22 cents, or 8.03%, to end at $2.52. Volume of 21.7 million shares was more than double the usual turnover.

Ironically, Kodak - which has been battling with Apple Inc. and Canada's Research in Motion over its claims that the two smartphone makers had infringed its patents - got some good news on Monday from the federal government's International Trade Commission.

That agency has been hearing Kodak's legal claims against the other two companies and has a decision pending, but on Monday, it issued a ruling that upheld an earlier decision by one of its judges that Kodak did not infringe Apple's patents for imaging and related software. However, news of the ruling came well after trading in both stocks and junk bonds had wound down for the day.

Sears shrugs off downgrade

Sears Holdings shook off a downgrade from Moody's Investors Service Monday.

"There was no real Street activity," a trader said, seeing the 7½% notes due 2027 offered at 901/2. He said that was unchanged from previous levels.

Moody's dropped the retailer's corporate family rating to Ba3 from Ba2 and said the outlook remained negative. The rating cut was due to negative revenue and operating margin trends and the fact that credit metrics have weakened.

GenMar still down

General Maritime Corp.'s recently battered 12% notes due 2017 "are still getting whacked, and still staying lower," a trader said, quoting the New York-based oil tanker company's paper at 69 bid, 70 offered, which he said was down a half point on the session.

"There was some trading, moderate trading, not a lot," he said, adding, "They're staying at the lower levels. "So we'll keep an eye on that one this week too."

The bonds fell to their all-time record lows last week, after the company changed the terms of its loans to avoid breaking the conditions of its credit agreements.

© 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.