Distressed debt firm but trading thin ahead of holiday; OPTI gives back gains; Harrah's steady

By Stephanie N. Rotondo

Portland, Ore., Dec. 22 - Trading in the distressed debt realm was on the thin side on Wednesday, as the market winded down for the upcoming holidays.

"I think it finally ended," a trader said, as the next week before the New Year is expected to be even more muted than this week.

The trader noted that less than $700 million of debt traded in the secondary space.

"It's really, really non-existent," he said.

Still, another trader said that despite the lack of major activity, the market was generally firmer.

That, however, was not the case for OPTI Canada Inc. The company's bonds had traded up on Tuesday, but come Wednesday, the gains were lost and the bonds ended "a touch lower" than the previous session.

Harrah's Entertainment Inc. meantime was given the award for being one of the most actively traded credits of the day. Still, the bonds closed out the day unchanged.

Dynegy Holdings Inc. was also unchanged and traders noted that turnover in the name was light.

OPTI gives back

OPTI Canada bonds "did give back the point and change from yesterday," a trader said.

He added that the credit was the "most active of everything" and placed both issues - the 7 7/8% and 8¼% notes due 2014 - at 68 bid, 69 offered.

He noted that the 7 7/8% notes were trending toward the lower end and the 8¼% notes toward the higher point.

Another trader said the debt "started down a bit from yesterday, but kind of came back some," ending around 69. Still, that was "a touch lower than yesterday's highs," he said.

OPTI is a Calgary-based oilsands producer.

Harrah's active, steady

After OPTI, Harrah's Entertainment - now dubbed Caesars Entertainment - was deemed the second most active credit, though in terms of pricing, levels were about unchanged.

A trader saw about $25 million of the 10% notes due 2018 change hands at 89 bid, 89¼ offered. Another $15 million of the 10¾% notes due 2016 turned over at 941/4.

Several other sources placed the 10% notes around the 89 level, also calling that unchanged.

Harrah's/Caesars is a Las Vegas-based casino operator.

Dynegy unchanged

Dynegy Holdings debt was on the quiet side and essentially unchanged.

A trader saw the 7½% notes due 2015 at 761/2, while another pegged the 7¾% notes due 2019 at 67 bid.

The Houston-based power producer announced last week that it had agreed to the $5.50-per-share sale to Icahn. The total transaction is valued at $665 million.

Dynegy has about $3.95 billion in debt.

The agreement to be acquired brought an objection from fellow shareholder Seneca Capital - which sided with Icahn in opposing a previous takeover bid by Blackstone Group.

Dynegy has until Jan. 24 to solicit other offers. The sale is contingent upon Icahn completing a tender offer for the outstanding shares.

A&P facility breaks

The Great Atlantic & Pacific Tea Co. Inc.'s credit facility freed up for trading, with the $350 million term loan quoted at par ½ bid, 101 offered on the open and then moving up to par 7/8 bid, 101 3/8 offered, according to a trader.

Pricing on the term loan is Libor plus 700 basis points with a 1.75% Libor floor, and it was sold at a discount of 99. There is 101 soft call protection for one year.

During syndication, pricing on the loan was trimmed from Libor plus 750 bps and the original issue discount tightened from 98.

The company's $800 million 18-month debtor-in-possession financing facility also includes a $450 million revolver that is expected at Libor plus 300 bps with a 50 bps unused fee.

JPMorgan is the lead arranger, bookrunner and administrative agent on Great Atlantic & Pacific Tea's credit facility.

Proceeds will be used to refinance the company's pre-petition senior secured credit facility, to provide incremental liquidity and for working capital and general corporate purposes.

The company announced on Dec. 12 that it filed for Chapter 11 to facilitate a financial and operational restructuring designed to restore its long-term financial health.

Great Atlantic & Pacific Tea is a Montvale, N.J.-based supermarket chain.

Sara Rosenberg contributed to this article

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