Harrah's posts quarterly loss, bonds move up; OPTI gives back gains; booksellers trade higher

By Stephanie N. Rotondo

Portland, Ore., Feb. 25 - Though the distressed debt market was "significantly better," according to a trader, recent new issues were taking the bulk of investor interest on Friday.

He said that total trading volume in the secondary space was right about $1 billion, "but it felt a lot slower than that," especially as new issues made up most of that trading.

Additionally, the short holiday week, coupled with school vacations, left many desks empty.

Still, Harrah's Entertainment Inc. - now known as Caesars Entertainment Corp. - managed to trade actively and better, despite a recent string of losses.

The gains came as the company reported its fourth-quarter results, which showed a loss versus last year's profit.

OPTI Canada Inc. remained an active credit as well, though there continued to be no news out to cause the volume.

Booksellers like Nebraska Book Co. Inc. were seen trading up during the session. But what was "shocking" was gains in Baker & Taylor Acquisition Corp., which is reportedly in process of a refinancing.

Harrah's gains back losses

After losing a few points in the previous sessions, Harrah's Entertainment/Caesars Entertainment bonds were "back up 2 points," according to a trader.

He said the 10% notes due 2018 were the most active, ending at 94 bid, 94½ offered.

Another trader said the notes "traded a lot" around 94, up "almost 2."

Yet another market source deemed the paper up 1¾ points at 94½ bid.

The Las Vegas-based casino operator reported its fourth-quarter earnings Friday, showing a net loss of $167.7 million.

The company had reported a $295.6 million profit the year before and attributed the swing to continued declines at its Atlantic City properties.

However, the company did see a 1% sales increase at $2.12 billion.

On Thursday, Caesars announced pricing on a new $400 million term loan, ahead of its Friday lender call. The loan will carry an interest rate of Libor plus 8 points.

Caesars priced the six-year loan at 99.

Proceeds from the new debt will be used, in part, to complete the 660-room Octavius Tower at Caesars Palace in Las Vegas.

OPTI reverses direction

Despite ending Thursday on the firm side, OPTI Canada bonds were "softer after yesterday's run-up," a trader said.

He called the 7 7/8% and 8¼% notes due 2014 down "a point and change" around 531/2. Another trader saw the notes falling 1½ points, also to that 53½ area.

There continued to be no fresh news out on the Calgary, Alta.-based oilsands producer.

Booksellers trade up

Nebraska Book Co.'s 10% notes due 2011 - the "best in the capital structure," according to one trader - traded "maybe fractionally better" in the final trading session of the week.

The trader quoted the bonds at 101 bid, 101 3/8 offered.

Another trader said the Lincoln, Neb.-based textbook distributor's notes were "up small" around 101 3/8.

But the "one that is shocking everybody" was Baker & Taylor Acquisition, another market source said.

The Charlotte, N.C.-based book distributor is said to be marketing $240 million of five-year notes to pay outstanding debt. Jefferies is reported to be leading marketing efforts, which are supposedly running through March 2.

The market source said the company's 11½% notes due 2014 were trading in a 97 bid, 98 offered context on news of the refinancing. That compared with levels in the mid-80s earlier in the month and levels around 70 at the beginning of the year, he said.

"It's surprising," he said of the refinancing. "It's a very tough business."

The source noted that the company was "probably in a cyclical decline" and that the company has "a little bit of leverage.

"It's a bit of a stretch," he said.

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