Ameren holds gains, Travelport steady; Suntech converts up despite missed payment

By Paul Deckelman

New York, March 15 - The distressed-debt world saw a quiet end to what had been a busy week that featured big gains for two well-known issuers.

Thursday's big winner, Ameren Corp., was seen by traders pretty much hanging onto its big gains - and in one case even extending them, though on considerably less volume than had been recorded Thursday. That was when the power-generating company's bonds had zoomed nearly 20 points, propelled by the news that it had sold its merchant-power business to Dynegy, Inc. The transaction will allow Ameren to focus more on its core utility business, while shedding a big chunk of debt from its balance sheet.

Traders also saw Travelport LLC's notes pretty much clinging to the peak levels they had hit earlier in the week after the travel-services company had announced plans for a broad debt restructuring, including an exchange offer aimed at extending the maturities of its 2014 bonds.

However, just as in the case of Ameren, volume was well down from the heavy levels observed earlier in the week.

Instead, the traders said, investor focus was largely directed to the busy new-deal activity seen in the broader junk bond market, as well as the heavy trading seen in Chesapeake Energy Corp.'s 2019 bonds, the week's clear volume leader in the junk sphere amid the legal controversy over the company's purported plans to call its bonds at par, well under their current market value.

In the convertibles market, participants meantime saw Suntech Power Holdings Co. Ltd.'s 3% convertibles up around 2½ to 3 points, as investors viewed the absence of a bankruptcy filing on Friday as more or less positive - despite the fact that the bonds came due with no redemption forthcoming from the issuer.

The China-based solar power company said late Thursday that it didn't plan to make the $541 million debt repayment and instead was working with holders on a consensual restructuring of the bonds.

Hover, the situation was uncertain, since not all of the bondholders had agreed to the restructuring and the holdouts could, in theory, force the company to file for bankruptcy protection anyway.

Distressed market quiets down

A trader said that while there had been considerable activity in the week just completed in such recently underperforming credits as Ameren and Travelport, spurred in each case by positive news, things slackened off considerably on Friday.

Instead, he said, "all of the focus today was new issues," with more than $2 billion of new paper having priced in the junk market and then having firmed smartly when those bonds were freed for aftermarket activity.

On top of that, he said, Chesapeake's 6.775% notes due 2023 "are still obviously pretty topical - that's been the most active name the past couple of days."

Ameren holds Thursday gains

Back among the more mainstream distressed names, the trader said that Ameren Corp.'s 7.95% notes due 2032, issued by the St. Louis company's AmerenEnergy Generating Co. subsidiary - Genco - were "still round 72ish," about the level to which those bonds had jumped from Wednesday's closing spots around 55 bid.

A second trader had those bonds going home at 71¼ bid, 72¼ offered.

At another desk, a market source said that those bonds had traded all day in a 71¾ bid context, which he called down 7/16 point from Wednesday's close just above 72.

He saw around $6 million of those bonds change hands on a round-lot basis, down from more than $10 million that traded Thursday.

The first trader said that the company's most recently active issue, the 7% notes due 2018, were still trading in a mid-70s context, perhaps around the 76 bid mark, which he called about unchanged on the day.

"They had their big run-up yesterday [Thursday]," when the bonds had soared into the mid-70s on news that Ameren will unload Genco and several other non-core subsidiaries on sector peer Dynegy, which wants those companies' coal-fired power plants. Ameren will get neither cash not stock from Dynegy, but manages to off-load $825 million of Genco debt onto a newly formed Dynegy subsidiary, improving its own credit metrics.

A second trader quoted those '18s in a 76 bid, 77 offered context, while a third saw the bonds ending at 76¼ bid, calling that up ½ point on the day.

Round-lot volume in the credit was over $9 million, the most of any bond in Ameren's capital structure, although that was well off from Thursday's busy pace, when over $40 million of those notes had traded, moving up to the mid-70s from pre-news levels around 57.

Travelport holds gains

One of the traders saw little end-of-week activity in the bonds of Travelport, which had risen earlier in the week on the news that the Atlanta-based travel services provider would restructure its debt, including issuing new 2016 notes in exchange for its existing 2014 bonds.

"That was a nice move up," he said, "but there really wasn't much activity today. They were pretty much unchanged," with the 9 7/8% notes due 2014 "still around" 101½ bid.

He saw its 9% notes due 2016, recently up around the par level, "not really trading at all," with its 11 7/8% notes due 2016 likewise in active. He saw the latter bond in an 84 to 85 bid level, "so there was very little on those."

The company' bonds had been strengthening since the announcement Tuesday that bondholders had agreed to a plan that swaps their debt for new 13 7/8% notes due 2016 or floating-rate notes due 2016, plus cash.

The company also reached an agreement with its PIK-loan lenders to swap the debt for equity.

"All the move up was earlier in the week, and today was new-issue focused," the trader said.

Suntech edges higher

In the convertibles market, Suntech Power's 3% convertibles due on Friday - but not redeemed - traded around 32½ bid, 34 offered early Friday. It wasn't as actively traded as it had been on Thursday when pricing was lower at 30.

Suntech Power shares did an about face, ending Friday's session, higher by 3 cents, or 4.5%, at 70 cents per share, but intraday they were as much as 30% higher. The shares had dropped 16 cents, or 19%, to 67 cents on Thursday.

The idea behind Friday's trade in Suntech was that no news was good news and the bonds were just a hair stronger amid a lack of color.

"Theoretically someone could force them to file, but it wouldn't be in their best interest to do so," a Connecticut-based trader said.

The trader put the market at 34ish following trades earlier in the day at 32.5 bid, 34 offered. But it was "just a couple of trades."

The company said on March 11 that about 60% of bondholders had agreed to wait until May 15 before exercising their rights for repayment. But traders pointed to the fact that the prospectus didn't allow for such a delay without the consent of all holders.

Late Thursday, Suntech issued a release stating, "As previously disclosed, the company plans to continue to work with holders of the notes with a view of achieving a consensual restructuring."

-Rebecca Melvin contributed to this review

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