Distressed bonds, volume weaken; NewPage debt steady; Caesars, Clear Channel paper lose ground

By Stephanie N. Rotondo

Portland, Ore., Aug. 16 - Distressed bonds were "a little off on most of the go-go stuff," a trader reported Tuesday.

Additionally, "volume was down a little bit. There was no real high volume in any given name."

"I wouldn't say it was overly active," said another trader, adding that there weren't any "notable movers" throughout the session.

Even NewPage Corp., which reported earnings Monday and also said that it had to repay early part of its revolving credit facility due to its inability to refinance or repurchase certain debt, managed to hold its ground. The first-liens were among the most actively traded issues of the day, but the second-liens remained radio silent.

Caesars Entertainment Corp. and Clear Channel Communications Inc. finished the day a bit softer, though there was no fresh news out on either company to cause the declines.

NewPage holds steady

NewPage's 11 3/8% first-lien notes due 2014 held their ground in Tuesday trading, just one day after the company reported a narrower second-quarter loss.

One trader quoted the bonds at 80 bid, 81 offered. Of the 10% second-lien notes due 2012, he said, "There's no real volume in them anymore. I don't think I even saw a quote in them. They've just gone away."

Another trader pegged the 11 3/8% notes around 80, which he said was "unchanged, maybe a smidge better."

In its earnings release out Monday, the Miamisburg, Ohio-based papermaker reported net sales of $888 million, down from $890 million the year before. Higher paper prices were offset by fewer sales, the company said in a statement.

Net loss, however, narrowed to $132 million from $174 million.

"During the quarter, we were able to realize improved pricing even as we experienced inflationary pressure and some softening in demand for our core products," George F. Martin, president and chief executive office, said in the earnings release.

At the end of the quarter, NewPage had $136 million in available liquidity, consisting of $9 million in cash and equivalents and $127 million under its revolving credit facility.

However, the company also said in its 10-Q that it will have to repay $30 million of its $500 million revolving credit facility by Oct. 3, as it was unable to refinance its floating-rate notes and 10% notes by July 4.

If the company does not refinance or repurchase the notes by Dec. 2, the remaining $470 million will be accelerated to March 1, 2012 from Dec. 21, 2012.

And, if the debt is not dealt with by Jan. 31, 2012, the 11 3/8% notes will be accelerated to March 31, 2012.

NewPage has been working with advisors to come up with a restructuring plan but has yet to announce any plans. The company said that if it cannot find a way to deal with its debt obligations, it could be forced to file for Chapter 11 protections.

Caesars, Clear Channel falls

Caesars Entertainment's 10% notes due 2018 were "probably off a point on the offered side," a trader said, quoting the paper at 81 bid, 82 offered.

That was down from levels around 83.

Another trader echoed that market, saying that the notes were "maybe a little lower."

There was no fresh news out on the Las Vegas-based casino operator.

Nor was there any fresh news out on San Antonio-based Clear Channel Communications, but that didn't stop the company's debt from softening.

A trader saw the 11% notes due 2016 falling 1½ points to close around 711/2. A second trader called the 10¾% notes due 2016 lower at 74 bid, 74½ offered, down from "75-ish."

Broad market slightly weaker

Elsewhere in the land of distressed debt, a trader said Sprint Nextel Corp.'s 8¾% notes due 2032 were down "another point" around 99.

Another trader saw Edison Mission Energy's 7% notes due 2017 slipping to 68 bid, 69 offered.

Sorenson slips

Sorenson Communications Inc.'s 10½% notes due 2015 started the day in a 64-66 context, a trader said, but then fell to a 62-64 range, with the last trades at 63 bid, down a point.

There were no fresh announcements or regulatory filings from the Salt Lake City, Utah-based company, which provides equipment and services that allow the hearing-impaired to communicate via telephone networks.

The trader said he thought there might have been "some numbers out," but a check turned up nothing, at least initially.

Paul Deckelman contributed to this article

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