Week ends on down note; Harrah's scraps IPO, bonds fall; First Data gives back Thursday gains

By Stephanie N. Rotondo

Portland, Ore., Nov. 19 - There was "lots of downwardness" in the distressed debt market, a trader reported Friday.

"The market came back a little [by the end of the day], but it was mostly down," said another market source.

Harrah's Entertainment Inc. said Friday it would cancel its previously planned initial public offering, which resulted in a 1- to 2-point loss for the casino operator's bonds. The term loans were also moving around, but still fared better than its corporate debt counterparts.

First Data Corp. notes were also about 2 points softer, giving back some of the gains posted Thursday. A trader speculated that the losses were due in part to Thursday's pop, as it might have been too much.

And, OPTI Canada Inc. continued to weaken, losing another 1 to 2 points on the day. Investors have been considering what weak production at the company's Long Lake project will mean for the already struggling company.

Harrah's slips on IPO news

Harrah's Entertainment bonds dropped in Friday trading after the company announced that it was "not pursuing its initial public offering of common stock at this time due to market conditions."

A trader saw both the 10% notes due 2018 and the 10¾% notes due 2016 2 points lighter at 86½ and 893/4, respectively. Another trader echoed those levels, saying they were "both down 2 points, but not on a whole lot of volume."

Harrah's term loans were meantime all over the place after the news came out.

One trader had the term loan B-1 and B-3 quoted at 87 5/8 bid, 88 1/8 offered in the afternoon, after hitting a low of 86½ bid, 87½ offered in the morning. On Thursday, the trader saw the loans go out at 87½ bid, 88 offered.

A second trader was also quoting the B-1 and B-3 at 87 5/8 bid 88 1/8 offered, but he said it was unchanged on the day and had rebounded from lows of 86¾ bid, 87½ offered in the morning.

Harrah's term loan B-2 also saw a bit of movement in trading with the debt quoted by the first trader at 87¾ bid, 88¼ offered in the afternoon, after hitting lows of 86¾ bid, 87¾ offered in the morning. This paper ended Thursday at 87 5/8 bid, 88 1/8 offered, he said.

The second trader was quoting the B-2 at 87 7/8 bid, 88 3/8 offered, flat on the day after coming back from morning lows of 87 bid, 87 ¾ offered.

The first bank debt trader explained that the debt traded down initially because of the IPO news, but once it weakened so much, some people saw it as an opportune time to buy, which pushed levels back up.

"I think they will get around to it," opined a distressed bond trader. "There's a lot to absorb [now] after the [General Motors Corp. IPO on Thursday]."

The trader went on to say that Harrah's could have probably done the stock sale, but that it would likely have garnered a lower price per share than it wanted.

"They have enough cash to hang on for a while, so I think they are just going to wait it out."

Harrah's is a Las Vegas-based provider of branded casino entertainment.

First Data gives back

After running up in Thursday trading on the back of positive comments from company management and news of a debt refinancing, First Data's debt "gave a little bit back," a trader said.

"They probably went too far yesterday," he speculated, as the bonds had gained anywhere from 2 to 6 points, depending on the issue.

He said that about $75 million total of First Data paper turned over - well below the volume seen Thursday - and pegged the 11¼% notes due 2016 at 783/4, the 9 7/8% notes due 2015 at 87½ and the 10.55% notes due 2015 at 89. He said the losses were anywhere from 1 point to "a couple" points.

Another trader said both the 11¼% notes and the 9 7/8% notes were down a deuce, the former at 78¾ and the latter at 871/2.

The Atlanta-based electronic payment processor said Thursday it would launch a $5.5 billion debt-for-debt exchange, in which holders of the 9 7/8% and 10.55% notes would get new debt, with longer maturities.

For each $1,000 of the notes tendered by the early tender deadline - which is 5 p.m. ET on Dec. 1 - holders will receive $500 worth of new 8¼% cash-pay senior second-lien notes due 2021 and new 8¾%/10% pay-in-kind toggle senior secured second lien notes due 2022, as well as $500 of 12 5/8% senior unsecured notes due 2021. Those tendering after the early deadline will receive $485 of the cash-pay second-lien notes and $485 of the unsecured paper for each $970 of old notes tendered.

Fitch Ratings said it expected to rate the new debt CCC, while Moody's Investors Service planned to issue a Caa1 rating.

OPTI takes another hit

OPTI Canada saw its bonds falling "down another 2 [points]," according to a trader.

He placed the 8¼% notes due 2014 at 71 and the 7 7/8% notes due 2014 at 70.

"They could be heading towards the abyss," he said.

Another trader also placed the 7 7/8% notes around the 70 level, on about $15 million to $20 million traded.

The Calgary-based oilsands producer had gotten beat up on Thursday, just one day after the company presented at Bank of America Merrill Lynch's credit conference in New York on Wednesday. The company and its project partner - Nexen Inc., who presented on Tuesday - warned that production at its Long Lake project would be weaker than expected. Though OPTI recently was able to raise money in a debt financing, giving it more liquidity in the near term. It also said that its profitability depended largely on the Long Lake project.

Sara Rosenberg contributed to this article

© 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.