Caesars Entertainment second-liens active, higher in midweek trading; AMD falls post-earnings

By Stephanie N. Rotondo

Phoenix, Jan. 21 – Distressed bonds were climbing higher in Wednesday trading, following the trend of the equity markets.

For its part, stocks were better as investors reacted to reports that the European Central Bank would announce a new stimulus plan after its Thursday meeting.

In distressed dealings, Caesars Entertainment Corp.’s second-lien notes were trading actively and better as an informal group of debt holders said more than 56% of first-lien bank debt holders had agreed not to support the company’s current restructuring plan.

But while the marketplace had a positive tone, Advanced Micro Devices Inc.’s debt came in.

The weakness in the name came on the heels of a lowered revenue forecast for the first quarter.

Caesars’ second-liens rise

An informal group of Caesars’ debt holders is gaining ground in their effort to squash support of the company’s restructuring plan.

According to a press release put out by said group on Wednesday, it has inked binding agreements with over 56% of first-lien bank debt holders to forgo consenting to the plan that would split the now-bankrupt Caesars Entertainment Operating Co. Inc. into a two-sided real estate investment trust.

The plan would also give first-lien bondholders a 92% recovery on their holdings, whereas junior creditors would get just over 10%.

A week ago, 50% of bank debt holders had signed non-support agreements.

In response, the 10% second-lien notes due 2018 were moving on up.

“An awful lot” of the notes traded at 21 to 22, a trader said, which “gets them up a couple of points.

“[Trace] states volume at $30 million,” the trader added. “I’d bet a lot more actually traded, up a couple of points.”

The 12¾% notes due 2018 traded “in the same range,” he said, but “they weren’t as active, about $3 to $5 million, the 10s were the active ones.

“Looks like its Caesars all day, when you look at these lists.”

Another trader said the 10% notes were “fairly active,” placing them at “21 and change, up probably 2 points.”

A third source pegged the issue at 22 bid, up 5 points on the day.

Wednesday’s news could be considered a boon for the second-lien holders, especially when viewed in context of news out on Monday regarding a lawsuit in Manhattan pertaining to a refinancing plan Caesars cobbled together in September.

On Monday, U.S. District Judge Shira Scheindlin gave credence to junior noteholders’ claims that Caesars was looking to thwart their recovery prospects by moving around assets. The judge said that such a transfer was a violation of the federal Trust Indenture Act of 1939.

AMD cuts revenue expectations

Advanced Micro Devices lowered its first-quarter revenue projections in its fourth-quarter earnings release late Tuesday.

Come Wednesday, the company’s debt was on the decline.

One market source saw the 7½% notes due 2022 at 88 bid, down over 2 points from the previous session.

Another source quoted that issue at 87 bid, 87¼ offered, which compared to 90 bid, 90¼ offered previously.

That source also pegged the 7% notes due 2024 at 83¼, down from 85.

At another desk, a trader said the name was “down a couple points from the last real notable round-lot trades.”

He saw the 7% notes in an 82½ to 83 zip code and the 7½% notes around 87.

The chipmaker – which has been losing market share – said in its earnings release that first-quarter revenue would likely be about 15% lower than the $1.24 billion in revenue earned in the fourth quarter.

At about $1.05 billion, that projection comes in well below expectations of $1.2 billion by analysts polled by Thomson Reuters.

Also in the fourth quarter, the company swung to a loss, posting a net loss of $364 million, or 47 cents per share.

That compared to a profit of $89 million, or 12 cents per share, the year before.

On an adjusted basis, the company broke even.

Analysts had forecast a profit of a penny per share.

Revenue for the quarter was down 24% from the same period of 2013, but came in line with what the company had projected back in October.

Paul Deckelman contributed to this article

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