Sprint Nextel inches higher; energy sector trades up, reversing course; Caesars up with market

By Stephanie N. Rotondo

Portland, Ore., May 29 - Distressed debt was "generally higher," a trader said Tuesday, though others lamented that it was stocks - specifically Facebook - and higher-quality credits, like Ford Motor Co., that were getting the bulk of the action.

"There's not much today going on really," a trader said. "The market felt a little better in general."

Sprint Nextel Corp.'s bonds headed into higher territory Tuesday. The boost came as the company announced an early redemption of 2013 securities and also said that it had received a new credit facility to facilitate a purchase of equipment from Ericsson.

Meanwhile, distressed investors continued to zero in on energy and related names, such as ATP Oil & Gas Corp., Edison International Inc. and Patriot Coal Corp. Last week, those same names took a beating, but were managing to follow the upward trend come Tuesday.

Sprint paper rises

Sprint Nextel debt moved up about a point across the board Tuesday, following news of an early debt redemption and a new credit facility.

A trader said the 6 7/8% notes due 2028 moved up a point to 751/4, while a second source saw the 6% notes due 2016 rising nearly a point to end at 92¼ bid.

The Overland Park, Kan.-based wireless telecommunications provider announced Tuesday that it was redeeming $1 billion of its 6 7/8% notes due 2013 on June 8. Additionally, the company said it had secured a $1 billion credit facility via Deutsche Bank and an unnamed syndicate that would allow it to finance equipment purchases through Ericsson.

Energy gets a lift

Energy and related sectors were heavy last week but were rebounding some come Tuesday trading.

One trader saw Edison International's Edison Mission Energy-linked 7½% notes due 2013 up 1½ points at 60, while Patriot Coal's 8¼% notes due 2018 moved up just under a point to 503/4.

The trader also saw ATP Oil & Gas' 11 7/8% notes due 2015 inching up half a point to 531/4.

Another trader said Patriot's notes were "a little bit better," trading in a 50-51 ZIP code. He said Edison's 7% notes due 2017 were similarly better, trading around 56.

A third source called Patriot's paper up nearly a point at 503/4, while sector peer Alpha Natural Resources Inc.'s 6¼% notes due 2021 improved almost a point to 90½ bid.

Caesars wins

Caesars Entertainment Corp.'s liquid 10% notes due 2018 were trading in tandem with the broader market, gaining at least a point on the day, according to traders.

One trader pegged the notes at 691/2, up a point, while another deemed the debt up a deuce at 70 bid.

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

ResCap moves up timing

Residential Capital LLC moved up the commitment deadline on its $1.45 billion 18-month debtor-in-possession financing facility to 5 p.m. ET on Wednesday from Thursday because the deal is well oversubscribed, a market source told Prospect News.

The facility consists of a $200 million revolver talked at Libor plus 400 bps, a $1.05 billion first-out term loan A-1 talked at Libor plus 400 bps to 425 bps with a 1.25% Libor floor and an original issue discount of 99, and a $200 million last-out term loan A-2 talked at Libor plus 600 bps with a 1.25% floor and a discount of 98.

There have not yet been any updates to pricing, but investors are expecting that the term loan A-1 spread will come at the minimum at the tight end of current talk, the source said.

Barclays Capital Inc. is the lead bank on the deal.

Proceeds from Residential Capital's DIP loan will be used to provide liquidity while the company undergoes its Chapter 11 process that is expected to result in the sale of substantially all of its assets for about $4 billion of proceeds.

Specifically, the company agreed to sell its mortgage origination and servicing businesses to Nationstar Mortgage LLC, and its legacy portfolio, consisting mainly of mortgage loans and other residual financial assets, to Ally Financial Inc.

The restructuring plan is expected to be approved by the fourth quarter.

Residential Capital is a New York-based mortgage originator and servicer.

Broad market firms

Among other distressed issues, a trader said Eastman Kodak Co.'s bonds were unchanged to "down a little," seeing the 7¼% notes due 2013 and the 7% convertible notes due 2017 at 13½ bid, 14½ offered, and the 9¾% notes due 2018 at 67 bid, 68 offered.

"I didn't see any really trading," he added.

Another trader agreed that the name was "fairly quiet," placing the 7¼% notes in a 14-15 context.

The second trader also saw Travelport LLC's 9 7/8% notes due 2014 "about unchanged, maybe slightly better" around 70.

A third trader said AMR Corp.'s 6¼% notes due 2015 were 'stronger," trading around "51-ish."

He also said that Ambac Financial Group Inc.'s paper - which tends to trade in line with one another - "traded a few times" around 211/2.

Sara Rosenberg contributed to this article

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