Momentive bonds push higher after lawsuit filed; retail, gaming and mining finish session mixed

By Stephanie N. Rotondo

Phoenix, June 2 - The distressed debt market was holding its ground Monday, though it was doing so amid muted activity.

"It feels like it's the Fourth of July holiday already," one trader said. It's been extremely slow. People are really complaining. But it's been the stock market show. Nobody is really selling anything."

According to one trader, total trading volume in the high-yield space - which also includes distressed names - "just eked over $1 billion."

As the summer doldrums were already beginning to set in, a lack of fresh news to spur movement one way or another was also impacting the market.

There was not even a clear trend across sectors. Retail, gaming and mining names were all trading mixed on the day.

However, Momentive Performance Materials Inc.'s 11½% notes due 2016 were pushing higher, as the trustee overseeing the indenture filed an complaint that sought to place the issue above the company's 9% second-priority springing lien notes due 2021 and the euro-denominated 9½% second-priority springing lien notes due 2021.

Momentive debt boosted

Momentive Performance Materials' 11½% notes ended up a deuce at 321/2, according to a trader.

The gains came on the heels of a lawsuit filed Friday by the indenture's trustee, U.S. Bank NA.

The lawsuit seeks to declare the 11½% notes as ranking higher than the 9% and 9½% euro-denominated notes due 2021, which were issued almost four years after the 11 ½% notes. According to the trustee's complaint, holders of the 11½% notes agreed to be subordinated only by senior debt, which neither the 9% or 9½% notes are.

When first issued, there was $500 million of the 11½% notes outstanding. There is currently $382 million outstanding, according to the trustee's filing.

Momentive, a silicones and advanced materials company based in Albany, N.Y., filed bankruptcy on April 13.

Retail, gaming active

Consumer-driven sectors like retail and gaming were mixed in Monday trading.

Claire's Stores Inc.'s 8 7/8% notes due 2019 held in at 853/4, a trader said.

In the casino space, Caesars Entertainment Corp. was moving seen moving higher.

A trader said Caesars' 11¼% notes due 207 inched up slightly to 89 1/8, while the 8½% notes due 2020 rose a point to 80 7/8.

The mixed movement of the sectors came as Gallup reported that a six-year high in consumer spending.

According to poll results released Monday, U.S. consumers reported spending on average $98 per day in May, a gain from $90 per day the year before and the highest spending level seen since 2008.

In its release, Gallup said the uptick in spending could be an indication the economy is improving, though it also noted that regardless of how individuals feel about the overall state of the economy, their personal cash flows seem to be rising.

Coal space mixed

In the more distressed coal space, a trader said Walter Energy Inc.'s 9 7/8% notes due 2020 were initially offered at 60, which was down from Friday's levels in the low- to mid-60s. By the end of business Monday, the paper had fallen 4 points to end at 56.

The trader also said that Alpha Natural Resources Inc.'s 6% notes due 2019 were off a point at 71, while a second source called the 6¼% notes due 2021 up over a point at 71¼ bid.

NII debt gains

A trader said NII Holdings Inc.'s debt was moving up Monday, though there was no fresh news to act as a catalyst.

The 8 7/8% notes due 2019 rose almost a point to 40, the trader said. The 10% notes due 2016 closed up half a point at 31.

NII Holdings is a Reston, Va.-based provider of Nextel mobile phone services in Latin America and Mexico.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.