Caesars debt falls with market, as does Rite Aid; Hovnanian, Clear Channel also under pressure

By Stephanie N. Rotondo

Portland, Ore., Sept. 12 - The distressed debt market "was on a rollercoaster," a trader said Monday.

The distressed space followed the trend set by the equity markets, first declining, then gaining, then repeating until there was a bit a of a rebound at the end of the day.

The trader also noted that there was "fair volume.

"I thought it was pretty good for a Monday."

"Higher-beta names were easily down in the morning 2 to 3 points," said another trader. "But they rebounded as the day wore on."

Still, investors continued to be spooked about the larger market, in particular what was going on with Europe and how that might impact the U.S. markets and economy. Action in the distressed debt arena was therefore centered on market mainstays like Caesars Entertainment Corp. and the like.

Caesars' debt closed just under a point weaker, up from its intraday lows.

Also busy was Rite Aid Corp. There was no news out on the Camp Hill, Pa.-based drugstore chain, but the bonds fell about a point nonetheless.

Meanwhile, Hovnanian Enterprises Inc.'s paper lost as much as point, while Clear Channel Communications Inc.'s bonds were steady to just barely lower.

Caesars' bonds pressured

Caesars' 10% notes due 2018 fell three-quarters of a point to 701/2, according to a trader.

Another market source echoed that level, while a third quoted the issue at 69½ bid, 70 offered, up from opening levels of 68 bid, 70 offered.

Among other casino operators, MGM Resorts International Inc.'s 6 5/8% notes due 2015 lost about a point, closing at 91 bid.

Both casinos are based in Las Vegas.

Rite Aid active, weaker

Rite Aid's 9½% notes due 2017 were "pretty active," a trader said.

He called the paper a point weaker around the 85 level. Another trader agreed with that assessment.

At another desk, a market source deemed the 8 5/8% notes due 2015 over a point softer at 88½ bid.

Hovnanian slides

A trader said Hovnanian's 10 5/8% notes due 2016 declined a deuce to 843/4.

Another source saw the paper falling just a point to 86 bid.

There was no fresh news out on the Red Bank, N.J.-based homebuilder, though the company did release earnings last week. Still, the homebuilding sector has once again come under pressure as the general economy takes a downturn.

Clear Channel clipped

Clear Channel Communications' 9% notes due 2021 closed around 79, according to a trader.

"In the end it was unchanged," he said.

Another trader said the issue was the most active of the Clear Channel complex, seeing the bonds slip about half a point to 78½ bid, 79 offered.

That compared with levels around "79-ish" on Friday, he said.

As with the other actively traded issues, there was no fresh news out on the San Antonio-based multimedia company to act as a catalyst.

Paper sector mixed

NewPage Corp.'s 11 3/8% first-lien senior secured notes due 2014 "seemed like it bounced from the bottom" to reach a closing level around 85 bid, a trader said. He said there was "not a lot of trading in them - they've been pretty inactive, for what ever reason." However, he said they had started the session around 84, so they were up a point on the day.

He saw the bankrupt Miamisburg, Ohio-based coated-paper manufacturer's 10% second-lien notes due 2012 still hanging around a 12-13 context, adding that he "had not seen much in those of late."

Elsewhere in the paper sector, a trader said that Catalyst Paper Corp.'s 11% senior secured notes due 2016 were "pretty much unchanged" in a 661/2-68 range on Monday, with "not a lot of quotes in those."

He saw the Richmond, B.C.-based 7 3/8% notes due 2014 "quoted lower but no trades" in a 25-27 context.

Paul Deckelman contributed to this article

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