Harrah's bonds active but weaker; Zions unchanged despite 'good' numbers; broad market softer

By Stephanie N. Rotondo

Portland, Ore., April 19 - The secondary high-yield market was "reasonably active" on Monday, according to one trader but still finished the day weaker than last week's closing.

The market was down about 1 to 1½ points, depending on the name, a trader said.

"It was a reasonably subdued day, although there was plenty of volume," another trader remarked. "It kind of ended flat to maybe down a little bit. It wanted to be infinitely weaker this morning, but it didn't quite get there."

He also opined that last week's news about Goldman Sachs Group, Inc. was still "distracting" market players.

Harrah's Entertainment Inc.'s bonds continued to be among the most active credits in the secondary world. Traders saw the casino operator's notes slipping in Monday trading, in line with the rest of the market.

Meanwhile, Zions Bancorp. released what one trader deemed "pretty good" numbers. However, the weakening marketplace prevailed and the bonds ended, at best, unchanged.

Harrah's active, but weaker

Harrah's Entertainment's bonds continued to be active, though they ended several points softer than Friday's levels.

A trader called the 10% notes due 2018 down a deuce around 851/2. Another trader echoed that level, but called it down just a point.

The second trader added that $25 million to "$30-odd million" of the notes traded.

Yet another source claimed the paper had lost somewhere in the neighborhood of 3 points, seeing the debt at 851/4.

Last week, the Las Vegas-based casino operator announced it will privately sell $750 million in new debt to refinance existing debt. The new issue is just one more in a long list of things the company has done of late to refinance its debt, which has also included amending certain credit facilities.

But while some see the potential in the company's refinancing attempts - Standard & Poor's upgraded its rating to B- last week - others are more cautious.

"We believe the issuance [of the new debt] does not materially improve Harrah's ability to refinance its credit facility in 2014 and 2015, nor does it improve the over-leveraged balance sheet," wrote CreditSights analyst Chris Snow in a report released last Wednesday.

Zions steady despite numbers

Zions Bancorp. debt "didn't look much different," a trader said, even as the company posted first quarter results that were "pretty good."

The trader said he saw the 5½% notes due 2015 offered around the 95¾ level, while the 6% notes due 2015 were quoted at 94 bid, 95 offered. He also saw the 7¾% notes due 2014 around 1041/2.

At another desk, the 5½% notes were placed around 951/4, which was "best I can tell, right about where they have been," a trader said.

The Salt Lake City-based banking company posted a first-quarter net loss of $86.5 million, or 57 cents per share. That compared with a net loss of $176.5 million, or $1.26 per share, the year before.

"We are encouraged by recent credit trends, particularly the significant decline in gross loan charge-offs during the quarter, and by a reduction in loss severity across the major loan categories," said Harris H. Simmons, chairman and chief executive officer, in the earnings release.

"We're also pleased with the continued strengthening of the composition of our core deposit base and the strong net interest margin. Finally, we are pleased that both our allowance for credit losses and our capital ratios continued to strengthen this quarter."

Broad market slips

Elsewhere in distressed territory, Smurfit-Stone Container Corp.'s 8¼% notes due 2012 dipped half a point to end at 92, a trader said.

Clear Channel Communications Inc.'s 10¾% notes due 2016 were also weaker, closing around 80¾ versus 81¼ previously.

And NewPage Corp.'s 11 3/8% notes due 2014 were "reasonably active," a trader said, around the 101 3/8 mark.

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