Momentive Performance bonds packing on points; Clear Channel firms; Freddie, Fannie active

By Stephanie N. Rotondo

Phoenix, May 8 - Distressed debt was trading with a firm tone during the midweek session.

Momentive Performance Materials Inc. was continuing to gain ground after running up in the previous session. A trader said the momentum was based on a regulatory filing that came late Tuesday, in which nearly $125 million of the 11½% notes due 2016 were registered.

"That sparked speculation that there might be some sort of exchange," the trader said.

Meanwhile, Clear Channel Communications Inc.'s debt was up yet again, this time on news the company was seeking an extension on its term loans.

In the preferred stock arena, Freddie Mac and Fannie Mae paper was massively traded after Freddie reported earnings. On Fannie's part, it was announced late Tuesday that the agency and its accounting firm, KMPG, had reached a $153 million settlement in a class-action shareholder lawsuit.

Momentive up more

Momentive Performance Materials' bonds were again trending higher following the filing of a registration statement on the 11½% notes due 2016 late Tuesday.

The S-1 filing "sparked speculation that there might be some sort of exchange," a trader said.

The trader called the 11½% notes up "another 5 to 6 points," trading with an 82 handle. The 9% notes due 2021 meantime moved up to 951/2.

"These things have had some run," he said.

Another trader placed the 11½% notes at 81¾ and the 9% notes at 951/2.

Momentive is a Waterford, N.Y.-based manufacturer of silicone and other specialty chemicals.

Clear Channel remains firm

San Antonio-based multimedia company Clear Channel Communications said Wednesday that it was seeking an extension on $1.5 billion of its term loans B and C.

The loans currently mature in 2016. The company wants to extend that date into 2018.

A trader called the 5½% notes due 2016 up "another 1½ points" at 781/2. The 11% and 10¾% notes due 2016 were also better, closing at 91½ and 91, respectively.

Clear Channel said the extension was part of the company's plan to "optimize its overall capital structure."

Freddie, Fannie on the rise

Freddie Mac and Fannie Mae preferreds saw a hefty amount of trading on Wednesday, after Freddie reported quarterly earnings.

Freddie's 8.375% fixed-to-floating rate noncumulative perpetual preferreds (OTCBB: FMCKJ) ended the day unchanged at $4.70, on over 14.5 million shares traded. Fannie's 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) meantime rose 7 cents, or 1.55%, to $4.59.

Over 39 million shares changed hands.

Freddie reported net income of $4.6 billion for the first quarter of 2013, its second best quarter ever. The agency's net worth totaled $10 billion. Under the rules of its conservatorship, the mortgage guarantor must pay anything over $3 billion to the U.S. Department of Treasury.

"It's causing a lot of speculation," a market source said, referring to what will happen to both Fannie and Freddie after the conservatorship comes to an end.

Meanwhile, Fannie said late Tuesday that it had reached a $153 million settlement with plaintiffs of a class-action lawsuit that alleged the company fraudulently misled investors, including Ohio pension funds.

A market source said that Fannie is slated to release earnings on Thursday, though he remarked that the schedule could change.

MBIA, TXU soften

Among other distressed credits, a trader said MBIA Inc.'s 0% surplus notes due 2033 gave back some of their recent gains, falling a point to 78.

The bonds had been running up in the previous couple of sessions due to news of a $1.7 billion settlement with Bank of America Corp.

Also, Energy Future Holdings Inc.'s Texas Competitive Electric Holdings' 15% notes due 2021 slipped 1½ points to 351/2.

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