Distressed bond market rises again in post-Fed haze; Caesars, Verso Paper end session weaker

By Stephanie N. Rotondo

Phoenix, Sept. 19 - The distressed debt space continued to post gains on Thursday, following the Federal Reserve's announcement on Wednesday that it would delay tapering its stimulus program.

"There were not too many losers today," one trader said. There were, however, some names that struggled to hold their ground.

Caesars Entertainment Corp. continued to be an actively traded name, just one day after the company said it was planning a $4.85 billion debt refinancing. The bonds continued to trickle down on the news.

Verso Paper Corp. was another name that was in decline on Thursday. There was no real fresh news to spur the downward tilt, however.

Elsewhere in the distressed realm, power producers Edison Mission Energy and Ameren Energy Generating Co. continued to firm up, according to a trader.

The trader said Edison's debt - which trades on top of one another - was trading around 66, while Ameren's 7% notes due 2018 moved up to 841/2.

The 6.3% notes due 2020 were meantime pegged at 77.

Nortel Networks Corp.'s 10¾% notes due 2016 were higher, ending that day at 116½ bid, 117 offered.

And Exide Technologies Inc.'s 8 5/8% notes due 2018 firmed up to 73, a trader said.

Caesars losing ground

Caesars Entertainment's bonds were weaker Thursday, just one day after the company said it was working on a plan to refinance $4.85 billion of debt.

A trader said the 10% notes due 2018 fell over 2½ points to 58 5/8, while the 10¾% notes due 2016 dropped half a point to 911/2.

On Wednesday, the Las Vegas-based casino operator announced that it intended to take out about $4.4 billion of CMBS debt, as well as a $450 million senior secured credit facility entered into by Octavius Linq Holding Co. LLC with new financing.

The new debt includes a $3.26 billion senior secured credit facility - comprised of a $3 billion term loan and a $269.5 million revolver - along with $500 million of first-lien notes and $1.35 billion of second-lien notes, the company said in an 8-K filed with the Securities and Exchange Commission.

A bank meeting for the new Citigroup Global Markets Inc.-led credit facility was scheduled for Thursday.

Verso debt dips

Verso Paper's debt dipped in Thursday trading, though there was no real news - only rumors - out on the company.

One trader said the 11¾% notes due 2019 lost half a point to end around 68. Another quoted the issue at 67½ bid, 68½ offered.

The second trader also saw the 11 3/8% notes due 2016 in a 47 to 48 context.

The Bangor Daily News in Maine said Thursday that it had received an anonymous phone call stating that Memphis-based papermaker was threatening to file for bankruptcy if the union organized at one Maine mill did not agree to shoulder a larger portion of health care costs.

The article quoted a spokesperson as stating that the rumor was false. In fact, if it were true, it would be illegal, the article pointed out.

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