Nortel Networks debt gains as courts plan joint trial; Kodak financing OK'd, bonds seen higher

By Stephanie N. Rotondo

Phoenix, March 8 - Firmness spread to the distressed debt realm from the equity markets, which continued to be a focus on Friday as stocks remained on an upswing.

Nortel Networks Corp. was getting busy late in the day as news came out regarding the company's cash and how it might get distributed to creditors. One trader said the news was "a good sign" that things were moving along.

Meanwhile, Eastman Kodak Co. was getting quoted higher, following a judge's approval of the company's amended financing plan. The plan has yet to be completed, but the court's OK was necessary to get the ball rolling.

Nortel news boosts bonds

News out late Friday regarding how Nortel's cash would be distributed among claimants was pushing the debt higher, a trader said.

"It's a good sign, at least," the trader said of the news that judges in Canada and the United States would work together in order to determine how as much as $9 billion would be distributed to creditors.

The trader called the now-defunct telecommunications company's debt "up a little bit," seeing the 10¾% notes due 2016 trading around 1131/2. The trader also saw the floating rate notes that were to have matured in 2011 at 1051/2.

But another trader said the issues "don't really look changed," pegging the 10¾% and 10 1/8% notes due 2013 at 113 bid, 114 offered.

He also quoted the floaters at 105 bid, 106 offered.

The Canadian company filed for bankruptcy in 2009 and has been in process of liquidating. The cross-border trial is expected to begin late this year.

Kodak financing approved

Kodak paper was getting quoted higher on Friday after a bankruptcy judge approved an amended financing plan.

"It's not done yet, but the judge approved it," a trader said. "[The bonds] were quoted quite a bit, but I'm not really sure there was a heck of a lot of trading."

The trader said the 9¾% second-lien notes due 2018 were up fractionally around 80.

The amended plan - an $843.7 million loan from second-lien lenders that was approved in January - gives the Rochester, N.Y.-based digital imaging company more time and flexibility as it looks to file a reorganization plan. Included in the amendment is a lowering of how much the company must raise from a sale of assets.

Topical credits move up

Other recently topical names were firming during the last trading day of the week.

Verso Paper Corp.'s 11¾% notes due 2019 inched up 1½ points to 781/2, despite reporting not-so-great earnings on Thursday and getting downgraded by Moody's Investors Service on Friday.

Navistar International Inc.'s 8¼% notes due 2021 were also "way up again," a trader said, seeing the issue putting on 1½ to 2 points, ending in a par 1/2-101 context.

The company reported earnings on Thursday as well and a less severe cash burn excited investors.

And, Petroleos de Venezuela SA's bonds started moving back up, after falling since the Tuesday death of Venezuelan president Hugo Chavez.

A trader placed the 8½% notes due 2017 at 971/4, up nearly a point, while the 9¾% notes due 2035 rose 1½ points to 951/2.

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