Momentive Performance bonds rise on talk of new deal; AMR's EETC paper rebounds; oil sector up

By Stephanie N. Rotondo

Phoenix, Oct. 11 - It was "more of an up day than a down day," a distressed debt trader said Thursday.

A lot of investors were focusing on Sprint Nextel Corp., however, following news that the company was potentially being bought.

"That was the big one of the day," a trader said.

In more distressed credits, Momentive Performance Materials Inc. debt was on the rise after the company said it planned to price $1.1 billion in eight-year notes. The proceeds from the new issue will be used to pay down the company's debt, thus the gains in the bonds.

AMR Corp.'s EETC paper was meantime also rebounding a bit. The bonds had dropped anywhere from 2 to 5 points in the previous session on news the bankrupt airline had asked the bankruptcy judge to allow a par-call of the debt, which would ignore a make-whole premium. A trader said Thursday's rally was due to talk that the request will be challenged.

Also rising were oil names like ATP Oil & Gas Corp. and Petroleos de Venezuela SA. There was no fresh news out on either name, but oil prices did gain during the session.

Momentive boosted by deal

A trader said Momentive Performance's debt "was active with the announcement of the new deal," referring to word that company planed to price $1.1 billion of notes due 2020.

The trader saw the 9% notes due 2021 trade as high as 80 before settling back in around 77. The 11½% notes due 2016 meantime rose 8 to 10 points to trade in the high-60s.

Another trader called the 11½% notes 10 points higher at 69. He noted that the issue "hadn't traded in awhile."

And, the second trader also pegged the 9% notes at 761/4, "up a couple [points]."

The Columbus, Ohio-based specialty chemical manufacturer is slated to price a new high-yield deal as soon as Thursday night. Proceeds will be used to repay senior secured credit facilities, purchase, redeem or discharge the 12½% second-lien notes due 2014 and for general corporate purposes.

AMR rebounds

AMR, the bankrupt parent company of American Airlines, saw its EETC issues rebounding a bit after sharply declining in the previous session.

A trader said the issues - the 13% notes due 2016, the 10 3/8% notes due 2019 and the 8 5/8% notes due 2021 - were "up a little bit," trading in a 104-104½ context, versus levels around 103 on Wednesday.

"People are talking about challenging the par-call versus the make-whole call," he said.

The trader was referring to news out Wednesday, regarding the Fort Worth, Texas-based company' request of its bankruptcy judge to repay the EETC issues, totaling $1.3 billion, at par plus accrued interest. If approved, AMR will be allowed to disregard a make-whole premium contained in the debentures.

Oil names head up

A trader said ATP Oil & Gas' 11 7/8% notes due 2015 were one of the day's "biggest gainers," rising 2 points to 21½ bid, 22 offered.

Another trader said the issue was "up a bunch," quoting it at 21 bid, 21½ offered.

Also higher were PDVSA's 9¾% notes due 2035. A trader saw the bonds gaining nearly 3 points to end at 82.

There was no news out on either company, but oil prices were firmer on the day.

The price per barrel of U.S. crude rose $1.17, or 1.28%, to $92.42.

Clear Channel debt surges

Clear Channel Communications Inc.'s bonds moved up in Thursday trading, according to traders.

One trader saw the 11% notes due 2016 put on 2½ points, placing the debt around 73. Another trader said both the 11% and 10¾% notes due 2016 headed up to 74½ bid, 75 offered.

Clear Channel's term loan B also rallied in the secondary as news surfaced that the company will be holding a conference call on Friday that is being hosted by Citigroup Global Markets Inc.

One trader had the term loan B quoted at 85 bid, 86 offered, up from 82¼ bid, 83¼ offered, and a second trader had the loan quoted at 84½ bid, 85½ offered, up from 82 5/8 bid, 83 1/8 offered.

Details about the upcoming conference call are not yet available.

Clear Channel is a San Antonio-based media and entertainment company.

Sara Rosenberg contributed to this article

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