Alcatel-Lucent loan deal helping boost bonds; Eastman Kodak debt drops on revised projections

By Stephanie N. Rotondo and Sara Rosenberg

Phoenix, Jan. 22 - Distressed debt was taking a backseat to higher-quality bond issues on Tuesday.

Overall, however, distressed bonds were on the firm side, following the trend of the equity market.

Alcatel-Lucent USA Inc. has a new loan deal in the market, a trader said. The deal has been going well, which has been pushing up the company's bonds.

On Tuesday, the company revised some terms of the new loan, including upsizing both its dollar-denominated and euro-denominated tranches.

Meanwhile, Eastman Kodak Co.'s paper slipped a bit as the bankrupt company released updated financial projections through 2017.

New loan boosts Lucent paper

A trader said Alcatel-Lucent's new loan deal was "going well" and that there was "strong demand for that, "so it's helping the bonds."

He called the 6½% notes due 2028 and the 6.45% notes due 2029 up a point around 78.

On Tuesday, the Paris-based telecommunications services and equipment company upsized its U.S. six-year term loan to $1.75 billion from $1.275 billion and its euro six-year term loan to €300 million from €250 million, according to a market source.

Pricing on the U.S. loan was also reduced to Libor plus 625 basis points from Libor plus 700 bps, while pricing on the euro loan was cut to Euribor plus 650 bps from Euribor plus 700 bps, the source said.

And, the original issue discount on the two loans was tightened to 99 from 98.

Both term loans still have a 1.25% floor.

The company's credit facility also includes a $500 million 31/2-year term loan that was reverse flexed to Libor plus 525 bps from Libor plus 600 bps, the source continued.

The discount on the 31/2-year loan was also moved to 99 from 98, while the 1.25% Libor floor was left unchanged.

Credit Suisse Securities (USA) LLC and Goldman Sachs & Co. are leading the covenant-light credit facility.

Proceeds will be used to refinance existing debt and for general corporate purposes.

Kodak slips on projections

Eastman Kodak's 9¾% second-lien notes due 2018 were quoted "a little bit lower," a trader said, following the release of revised financial projections through 2017.

The trader pegged the notes at 81 bid, 82 offered.

In a court presentation to creditors on Tuesday, the Rochester, N.Y.-based company said it expected to see sales of $2.5 billion in 2013. EBITDA was estimated at $167 million.

By 2017, the company hopes to post sales of $3.2 billion, on EBITDA of $494 million.

Edison's gains continue

Edison Mission Energy's bonds continued to climb up in Tuesday trading, though its credit-default swaps - settled in the previous week - have already been surpassed.

A trader placed the debt at 511/2, while another pegged it around 51.

The CDS was settled at 48½ on Wednesday.

The Santa Ana, Calif.-based power producer filed for bankruptcy in December.

Broad market stays firm

Elsewhere in the distressed realm, a trader saw ATP Oil & Gas Corp.'s 11 7/8% notes due 2015 holding around 7.

Among other oil producers, another trader said Petroleos de Venezuela SA's 8½% notes due 2017 rose nearly half a point to 991/2, while the 9¾% notes due 2035 inched up a quarter-point to 941/2.

The second trader also saw Supervalu Inc.'s 8% notes due 2031 rising to end around 68, while AMR Corp.'s 13% notes due 2013 improved to 1041/4.

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