Sprint bonds mixed as new issue prices; ATP keeps busy; iStar debt climbs on refinancing news

By Stephanie N. Rotondo

Portland, Ore., Feb. 28 - Distressed bonds were holding their own in Tuesday trading, sources reported. Many credits were somewhat active, but unchanged on the day.

Sprint Nextel Corp., for example, was unchanged to mixed. The action came as the company priced a $2 billion two-tranche new issue, the proceeds of which could be used for redemptions or to fund its Clearwire venture.

Even ATP Oil & Gas Corp., one of the busiest credits of the day, was nearly unchanged. On Monday, the company had announced that it had struck oil at a fourth well at its Telemark Hub.

Meanwhile, iStar Financial Inc.'s bonds were up slightly on news the company was launching $900 million in term loans, which would then be used to take out upcoming maturities. The company's bank debt was also firming.

Sprint ends mixed

A trader said Sprint Nextel's bonds were "kind of mixed" as the company priced $2 billion of new notes.

The 6 7/8% notes due 2028 were steady at 781/2, while the 8 3/8% notes due 2017 were up half a point at 98, he said.

The Overland Park, Kan.-based telecommunications provider priced the two-part deal on Tuesday. The deal came as $1 billion of 9 1/8% notes due 2017 and $1 billion of 7% notes due 2020.

Sprint said Monday that it would use proceeds from the sale for possible redemptions or funding of its Clearwire Corp. venture, among other things.

ATP remains active

ATP Oil & Gas' 11 7/8% notes due 2015 were quite busy, a trader said, seeing at least $30 million of the bonds change hands.

The Houston-based oil producer said Monday that it had struck oil at its fourth well at its Telemark Hub.

"The early production rate performance has met expectations and the rate of oil production is being increased," the Houston-based oil producer said in a statement.

But despite how busy the notes were trading Tuesday, the trader deemed the debt unchanged around 661/4. Another trader said that was down some from the previous session.

iStar debt gains

iStar Financial's 6½% notes due 2013 were "probably up a half," according to a trader.

He pegged the notes at 93 on a "couple trades.

"They hadn't traded in awhile," he added.

Also, the company's term loan A-2 moved up to 99 3/8 bid, 99 7/8 offered from 99 1/8 bid, 99 5/8 offered with the company's unsecured debt refinancing news and release of quarterly numbers, according to a trader.

The term loan A-1, however, was unchanged at 99¾ bid, par offered, the trader said.

For the refinancing of its 2012 unsecured debt maturities, the company will be getting $900 million of new senior secured term loans, comprising a $500 million first-out four-year term loan A-1 and a $400 million second-out five-year term loan A-2, a market source said. Price talk is not yet available.

Barclays Capital Inc. is the lead arranger on the new deal that will launch with a bank meeting on Thursday afternoon.

The debt is being done as new tranches, and the existing A-1 and A-2 term loans will be staying in place, the source added.

With the refinancing announcement, iStar came out with fourth quarter results that included a net loss of $35.2 million, or $0.43 per diluted common share, compared with a net loss of $67.1 million, or $0.73 per diluted common share, for the fourth quarter of 2010.

Adjusted EBITDA for the quarter was $100.3 million, versus $103.4 million in the prior year.

During the quarter, the company generated $243.7 million of proceeds from its portfolio and funded a total of $80.4 million of investments.

Additionally, in the fourth quarter, the company repurchased $37.6 million of its senior notes and repaid $109.8 million of its secured A-1 tranche.

At Dec. 31, 2011, the company's net leverage was 2.7 times, down from 2.8 times at the end of the third quarter, and gross leverage was 2.1 times.

iStar Financial is a New York-based finance and investment company focused on the commercial real estate industry.

Broad market slightly higher

Elsewhere in the world of distressed debt, James River Coal Corp.'s 7 7/8% notes due 2019 were steady at 67 5/8, a trader said.

The trader also called Caesars Entertainment Corp.'s 10% notes due 2018 unchanged at 751/2, though another source deemed that up half a point.

Verso Paper's 8¾% notes due 2019 got a 5-point surge, ending at 501/4, the trader commented. However, there was no fresh news out to act as a catalyst.

And, Burger King Corp.'s 0% notes due 2019 headed up a deuce to 69, also on no fresh news.

Another trader said Dynegy Holdings LLC's 8 3/8% notes due 2016 were "stronger still," trading around 66.

A "fair amount" of NewPage Corp.'s11 3/8% first-lien notes due 2014 traded as well, the second trader said. He placed the issue around the 60 mark.

He also saw the 10% subordinated notes due 2012 trade around 5.

"I haven't seen that one in awhile," he said, noting that the last time he saw the issue trade, it was around 8. "I think they are largely held by Apollo."

Sara Rosenberg contributed to this article

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