Market dips, but up from lows; iStar holds ground; NewPage, OPTI gain momentum; Harrah's slips

By Stephanie N. Rotondo

Portland, Ore., Feb. 23 - Trading in the distressed debt realm was "moderately active," a trader said Wednesday.

Another trader remarked that the market was "for the most part down, but it took a pretty strong bounce off the lows.

"Some of it is weakness; some of it is obviously fear of anything that [the rising cost of] oil might take a toll on, whatever might be affected by unrest in the Middle East," the trader said.

iStar Financial Inc. paper held its ground as the company readied to speak with lenders regarding a new $3 billion credit facility. The company intends to use proceeds from the proposed facility to pay down bank debt.

It was meanwhile a "no news is good news" day for NewPage Corp. and OPTI Canada Inc., as both companies saw their bonds gaining ground on no news. However, Harrah's Entertainment Inc./Caesar's Entertainment Inc. didn't fare as well, as its bonds dipped, also on no news.

Market stutters, Nexeo improves

The secondary market once again was under pressure during the midweek session, as market indexes slipped.

The CDX North American High Yield Index fell half a point to 103 9/16 bid, 103 11/16 offered. The KDP High Yield Index meantime dipped to 75.88, with a 6.69% yield, from 76.06, with a 6.61% yield.

iStar steady on news

iStar Financial bonds were unmoved by news the company had hired JPMorgan Chase & Co. to facilitate a $3 billion credit facility.

A trader also noted that trading was thin in the credit. He saw the 5 1/8% notes due April 1 closing around 99, while the 8 5/8% notes due 2013 finished around 101 1/8.

Another trader also called the debt unchanged, seeing the 5.15% notes due 2012 at 99.

On Thursday, iStar will meet with lenders to discuss the loan facility. The company intends to use proceeds to repay bank debt maturing in June 2011 and 2012.

The company has about $2.67 billion in long-term debt due in 2011 and $3.42 billion maturing in 2012.

On the news, Standard & Poor's placed the company on positive watch and Fitch Ratings said it expected to upgrade its ratings as well.

iStar is a New York-based real estate investment company.

NewPage, OPTI moving up

NewPage notes were trending higher, according to traders, though there was no fresh news out on the Miamisburg, Ohio-based coated papermaker.

One trader quoted the 10% notes due 2012 at 66 bid, 67 offered, the 11 3/8% notes due 2014 at 101 bid, 101½ offered and the 12% "super subs" due 2013 at 34 bid, 35 offered.

Another trader called the 10% notes up a half-point at 661/2.

Also up on no news was Calgary, Alta-based oilsands producer OPTI Canada.

"Those have grinded forward," a trader said, seeing the 7 7/8% and 8¼% notes due 2014 at 55½ bid, 53½ offered. The 9% senior notes due 2012 meantime closed at par bid, par ½ offered.

At another desk, a trader said the 7 7/8% notes were up "almost 2" to 53 and the 8¼% notes up "almost 1" to 52.

Harrah's falls with market

On the opposite end, Harrah's Entertainment/Caesar's Entertainment paper fell about 2 points on the day, with no news to act as catalyst.

One trader pegged the 10% notes due 2018 at 93, versus levels around 96 just two days ago. Another trader also placed the bonds at that level.

But another source called the notes 93½ bid, though still down a deuce.

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

Broad market weakens

Among other distressed credits, a trader saw Perkins Family Restaurant's 10% notes due 2013 trading at 8 bid, 8½ offered, though he wasn't sure how that compared.

"They don't trade very often," he said and when they do, it's "mostly odd-lots.

"That could be down or that could be right where they belong," he said.

In the autosphere, General Motors Corp.'s benchmark 8 3/8% notes due 2033 fell a point to 34 bid, 34½ offered.

A trader said Solo Cup Co.'s 8½% notes due 2014 were "getting beat up," dropping "almost 2 more [points]" to 863/4.

The trader also saw Ahern Rentals Inc.'s 9¼% notes due 2013 losing a point to end around 47.

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