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Momentive Performance debt declines amid court battle; NII Holdings stays in focus, bonds firm
By Stephanie N. Rotondo
Phoenix, Aug. 22 – As the week came to a close, one distressed debt trader said there was “not a lot of trading for sure.
“Next week is going to be even worse,” he said, noting that things will likely pick up in September, “once the kids are back in school.”
Trading was also limited as investors were keeping an eye on the Federal Reserve’s annual meeting in Jackson Hole, which began Thursday.
In a speech on Friday, Fed head Janet Yellen said that declining unemployment rates were not sufficient to prove economic growth. Given that, the central bank was not looking to base any future interest-rate increases on that data alone.
Momentive Performance Materials Inc. paper was weakening as U.S. bankruptcy court judge Robert Drain heard arguments related to the company’s plan of reorganization.
The company went into court on Monday to argue against bondholders who are claiming that they are being unfairly subordinated to other creditors. Some senior secured lenders have also joined the fight, stating that they have a right to a make-whole premium because their debt is being redeemed earlier than scheduled.
A trader said that there is some belief that the judge “could rule that they are subordinated to everything.”
On the news, the 8 7/8% notes due 2020 dropped to a low of 98 from levels around 102, the trader said.
He saw the issue going out around 99½.
As for the 11½% notes due 2016, those were trading around 7, he said.
That compared to levels in the low-20s at the beginning of the week.
NII, MBIA gain
A trader said NII Holdings Inc.’s debt continued to be on the active side.
He said the paper was firming up, seeing the 7 5/8% notes due 2021 move up to 15¼ from 14½. As for the 8 7/8% notes due 2019, they got as high as 30, the trader said.
MBIA Inc.’s surplus notes due 2033 were also “up a little bit,” according to the trader.
He pegged the issue at 75¼, up from 74 on Thursday.
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