AMR paper 'jockeying around,' trader says; Sprint, Clearwire firm; Hovnanian debt ends higher

By Stephanie N. Rotondo

Portland, Ore., Dec. 2 - Distressed debt "continued to feel better," a trader said Friday.

AMR Corp. debt continued to be active and the senior notes "moved back up," the trader said, after falling off in the previous session. Unsecured paper was also modestly better.

Also moving up were Sprint Nextel Corp. and Clearwire Corp. The two companies' bonds had gained ground on Thursday on word they had forged a new funding agreement that would allow Clearwire to build out its new network.

Clearwire also was boosted on Thursday by news it had paid a $237 million interest payment.

In homebuilders, Hovnanian Enterprises Inc.'s debt pushed higher, though there was no credit-specific news out. However, there was positive housing sector news out earlier in the week.

AMR 'jockeying around'

AMR, the parent company of American Airlines that filed for Chapter 11 protections on Tuesday, saw its senior paper gaining ground on Friday.

One trader called the 10½% notes due 2012 up "another 2 [points]" at 90 1/2. He also saw the 10.20% unsecured notes due 2020 at 20¼ and the 9% unsecured notes due 2012 at 21.

Another trader said the debt "moved back up" after trading "way off" on Thursday.

"There's a lot of jockeying around going on in the name," he said.

He pegged the 10½% notes at 90 bid, 90½ offered and also saw the 7½% notes due 2016 at 71 bid, 72 offered, versus levels around 68 previously.

The Fort Worth, Texas-based airline filed for bankruptcy earlier in the week in an effort to shed its heavy debt burden and to improve its cost structure.

Sprint, Clearwire extend rally

Sprint Nextel and Clearwire bonds remained on an upward course Friday, just one day after the two parties came to terms on a four-year funding agreement that would allow Clearwire time to build out its 4G network.

"All the Sprints were better," a trader said. In particular, he saw the 6 7/8% notes due 2028 up a point at 721/2, the 8¾% notes due 2032 up a point at 81½ and the 6.90% notes due 2019 up over a point at 811/4.

Another market source called the 6% notes due 2016 half a point better at 82¾ bid.

At another shop, a trader saw Clearwire's 12% first-lien notes due 2015 firmer at 89 bid, 90 offered.

Under the terms of the new agreement, Clearwire will receive $926 million from Sprint - its largest stakeholder - for unlimited usage of its WiMax 4G network through 2013. The funds will allow cash-strapped Clearwire to operate through at least 2012. Sprint will provide $350 million in prepayments for use of a new LTE network and could pony up $347 million toward an equity offering.

After 2013, Sprint will no longer receive unlimited network usage and will be charged based on what it uses.

Additionally, Kirkland, Wash.-based Clearwire said Thursday that it made a $237 million interest payment on its notes due Dec. 1, which include the 2017 maturity, the 12% notes due 2015 and the 8¼% notes due 2040.

Sprint is an Overland Park, Kan.-based telecommunications provider.

Hovnanian building up

Hovnanian Enterprises' 10 5/8% notes due 2016 were "up a few points," according to a trader.

He pegged the notes at 81, versus levels around 79½ previously.

Another trader said the issue "gained a deuce," closing around 82.

A third market source placed the paper at 813/4, up 1¼ points.

There was no fresh news out on the Red Bank, N.J.-based homebuilder, though a new - and somewhat upbeat - pending sales report did come out earlier in the week.

On Thursday, the National Association of Realtors released a report that showed the index of pending home sales rising 10.4% in October. That was the biggest gain since November 2010.

Analysts polled by Bloomberg News had predicted a 2% rise for the month.

Pending sales had dropped 4.6% in September.

Broad market gains strength

Elsewhere in the distressed market, a trader said ATP Oil & Gas Corp.'s 11 7/8% notes due 2015 were up 2 points at 681/2.

He also deemed Caesars Entertainment Corp.'s 10% notes due 2018 up "another 1¼ points" at 67.

Dynegy Holdings LLC's 7¾% notes due 2019 were meantime "kind of unchanged" at 691/2, even as the company filed its plan of reorganization.

Another trader said Bon-Ton Stores Inc.'s 10¼% notes due 2014 "gave back" gains from the previous session, falling "a few points" to 67.

"They popped a lot yesterday on the news that they had bought back a bunch on bonds on the open market," he said.

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