Distressed bonds firm in line with stocks; Clear Channel better; Exide hurt by bankruptcy buzz

By Stephanie N. Rotondo

Phoenix, June 7 - The latest jobs figures helped the equity markets gain some ground Friday, which in turn was helping the distressed debt arena.

"It wasn't overly active, but things were definitely better for the most part," a trader said. "Some of the names that were getting beat up recently were definitely trading better."

Another trader said that most things were up by at least 2 points.

Clear Channel Communications Inc. was one of the names that got hammered in the recent pullback. But Friday saw the company's LBO bonds putting on a point or two.

However, not all names were benefiting from the positive tone. Exide Technologies Inc., for instance, was down at least 2 points on the day, following an article from The Wall Street Journal late Thursday that indicated the company was nearing a bankruptcy filing.

Ameren Energy Generating Co. debt was also weaker. On Thursday, the state of Illinois threw up an obstacle in the company's efforts to sell its coal-powered plants to Dynegy Inc.

Clear Channel gains

Clear Channel Communications' 11% notes due 2016 were called up 1½ points on Friday, closing around 923/4.

Another trader said the 11% and the 10¾% notes due 2016 were better by a "couple points," trading around 93.

There was no fresh news out on the company. The bonds, however, are the objects of a current tender offer.

Clear Channel is a San Antonio-based multi-media company.

Exide notes fall

Renewed talk of a looming bankruptcy filing put pressure on Exide Technologies' debt during Friday trading.

One trader called the 8 5/8% notes due 2015 down 2½ points at 571/2. Another said the issue was active, trading in a 58 to 59 ZIP code.

"Everybody is waiting for them to file," the second trader said.

Late Thursday, The Wall Street Journal reported that the Milton, Ga.-based battery maker was prepping a Chapter 11 filing for as soon as this summer. If the company does file, it will be its second foray into bankruptcy since 2002. Exide has struggled amid declining demand for some of its products, as well as environmental regulation issues at its plants in California.

Ameren debt dips

Ameren Energy's plan to sell its coal-powered plants in Illinois to Dynegy was thrown for a loop Thursday, when the state's Pollution Control Board refused to transfer certain emissions waivers to Dynegy.

As a result, Ameren bonds were down.

A trader said that the 7.95% notes due 2032 were trading around 76, which compared to Thursday's levels of 78. He noted that there was a late-day trade on Thursday at 70, though he opined that it was an "off-print."

The trader also deemed the 7% notes due 2018 lower at 84, versus 85 previously.

Another trader also placed the 7.95% notes with a 76 handle, though he called that up 6 points day over day. The trader said the 7% notes fell nearly 2 points to 84.

"They were initially quoted down, but I think they came back to unchanged, maybe down a point," a third trader said.

The trader placed the 7% notes at 84 and the 6.3% notes due 2020 at 78.

In its argument to the state board, Ameren said that the rights transfer was necessary in order to complete the sale of the struggling plants. Ameren had previously secured the rights - which allowed it to put off installing new equipment to meet new emissions standards - due to financial hardship.

However, both Ameren and Dynegy said they intended to move forward with the sale process. The Illinois board said the parties could re-file their case, but that Dynegy had to prove the transfer was justifiable.

Broad market recoups losses

Elsewhere in the distressed realm, a trader saw Momentive Performance Materials Inc.'s 9% notes due 2021 trading higher in a 90 to 91 range.

At another desk, a trader said Edison Mission Energy paper was stronger at 59, though on no fresh news.

And, Patriot Coal Corp.'s 8¼% notes due 2018 inched up to close around 50.

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