Distressed bonds decline amid focus on primary; Momentive higher as new rates released

By Stephanie N. Rotondo

Phoenix, Sept. 4 – The distressed debt market was weak again on Thursday, and investors were keeping their eyes on the “tons” of new issues that hit the high-yield pipeline, a trader said.

As such, liquidity in the distressed space was muted.

However, fresh news on Momentive Performance Materials Inc. helped to move that name around a bit.

Momentive released the new interest rates on replacement debt it intends to issue under its plan of reorganization. During the company’s confirmation hearing, the judge overseeing the case had given the plan the go-ahead, provided that the company increased the rates on the new debt.

In the rest of the day’s dealings, most of the trading was focused on the typical go-to distressed names, such as NII Holdings Inc.

A trader saw those bonds declining during the session, though on no fresh news. He pegged the 10% notes due 2016 as down the most, losing nearly 2 points to end around 25½.

Among the other issues, the trader said the 11 3/8% notes due 2019 fell slightly to 64, while the 7 7/8% notes due 2019 slipped a quarter-point to 63¾.

The 7 5/8% notes due 2021 were deemed unchanged at 15.

Another trader said the name was lower, seeing the 11 3/8% notes trading around 64.

Caesars Entertainment Corp.’s bonds were meantime mixed. A trader said the 10% notes due 2018 put on almost a point to close around 26, as the 9% notes due 2020 fell a touch to 80 3/8.

Momentive inks new rates

Momentive Performance announced the modified interest rates on replacement debt it intends to issue under its reorganization plan on Thursday.

The company’s bonds moved up as the news came out.

“They keep creeping up a little bit,” a trader said, seeing the 10% notes due 2020 trading with a 93 handle and the 8 7/8% notes due 2020 around 95.

In late August, Momentive’s plan of reorganization was approved by U.S. bankruptcy court judge Robert Drain, but with conditions. One major condition was that the interest rates on replacement debt being given to the 10% and 8 7/8% noteholders be increased.

In court documents filed late Wednesday, Momentive said the rate for the 1.5-lien notes – the 10% notes – would be Treasuries plus 275 basis points. For the seniors – the 8 7/8% notes – the rate will be Treasuries plus 200 bps.

The Waterford, N.Y.-based specialty chemical and polymer manufacturer filed for bankruptcy protections in April.

Market tidbits

A trader said Verso Paper Corp.’s 8¾% notes due 2019 gained 3 points to 64 in Thursday trading.

However, he noted that the issue “hadn’t traded in two weeks.”

Endeavour International Corp.’s 12% second-priority notes due 2018 meantime fell another 7 points to 35, he said, though in just one trade.

The name has been on the decline all week since the company said it was skipping coupon payments on three series of notes, including the aforementioned 12% paper.

And, Scientific Games International Inc.’s 6¼% notes due 2020 came in “a few points,” according to the trader, finishing the day at 85¾. Like Verso, the paper “hasn’t traded in a couple weeks.”

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.