Exide, Momentive attempt to recover Friday losses; DirectBuy bonds decline quietly on downgrade

By Stephanie N. Rotondo

Portland, Ore., Feb. 13 - It continued to be muted in the distressed debt arena, as another onslaught of new high-yield issues hit the marketplace on Monday.

"People are just sitting around waiting for new issues," a trader said.

Still, there was strength in the market.

Exide Technologies Inc., for instance, regained some ground lost on Friday when the company reported less-than-stellar earnings. Momentive Performance Materials Inc., which had also reported preliminary figures, was on the rebound as well.

It was, however, radio silent from DirectBuy Holdings LLC. Standard & Poor's downgraded the company to D on Monday after a missed coupon on Feb. 1. But traders saw little goings-on in the name, which is believed to be tightly held.

Exide paper rebounds

A trader said Exide Technologies' 8 5/8% notes due 2018 "rebounded a bit from the lows" on Monday.

The paper had fallen on Friday following the release of poor quarterly results.

The trader pegged the notes around 80, up three-quarters of a point.

Another trader said the bonds were "not as active as they were Friday," but deemed them "maybe a smidge better" nonetheless.

He also placed the issue around the 80 mark.

On Monday, Standard & Poor's revised its outlook on the Milton, Ga.-based battery maker to negative.

On Friday, the company reported its fiscal third-quarter earnings on Friday. Profit more than doubled due to a $76.7 million French tax benefit, but revenues unexpectedly declined.

The company blamed the revenue dip on "unseasonably warm" weather.

For the quarter ended Dec. 31, net profit was $68.2 million, or 84 cents per share, versus $31.2 million, or 38 cents per share, the year before. Revenues declined 2% to $784.1 million.

Analysts polled by Thomson Reuters were expecting earnings of 20 cents per share on revenues of $847 million.

Looking forward, Exide said that continued mild weather in North America and Europe would likely impact its results, as would a slowing economy.

Momentive gains momentum

Momentive Performance Materials' debt also "recovered a little bit more," a trader said.

He called the 9% notes due 2021 up 1½ points at 89½ bid, 90 offered.

On Friday, the company released preliminary results for the fourth quarter. For the quarter, the company expects operating income in the range of $14 million to $24 million, down considerably from $161 million in the previous year.

Sales for the quarter are expected to be about $1.2 billion, flat from 2010 fourth-quarter sales.

And, segment EBITDA is anticipated in the area of $101 million to $111 million, versus $143 million in the prior year.

"Global macroeconomic volatility and inventory destocking negatively impacted our fourth quarter 2011 results," said Craig O. Morrison, chairman, president and chief executive officer, in a release.

"While we posted strong results in our phenolic specialty resins, North American forest products, formaldehyde and oilfield proppants businesses, weaker demand in Europe and Asia drove softer results across the balance of our portfolio," Morrison added.

DirectBuy dips, but quietly

DirectBuy Holdings' 12% notes due 2017 were little fazed by word on Monday that S&P had dropped its rating on the company to D from CCC following a missed coupon payment on Feb. 1.

"That bond just doesn't trade anymore," a trader said when asked how the debt responded. "It's pretty tightly held."

Another trader said he saw the issue around 20, which he guessed was down a couple points (i.e., minus accrued interest).

"Although the company has a 30-day grace period to make the payment, we believe this is highly unlikely, given our assessment of its deteriorating operating performance and liquidity sources," said S&P analyst Helena Song in a statement.

The company is based in Merrillville, Ind.

Broad market gains strength

Among other distressed issues, a trader said Residential Capital LLC's 9 5/8% notes due 2015 were "better," trading around 84.

Another trader saw AMR Corp.'s 10½% notes due 2021 trading upward at 1021/2.

The trader also called MF Global Holdings Ltd.'s 6¼% notes due 2016 stronger at 33½ bid, 34 offered.

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