OPTI dips in late-day trading; Harrah's bonds give up gains; Nortel debt steady; PMI unchanged

By Stephanie N. Rotondo

Portland, Ore., May 5 - A trader said the distressed debt market was "generally softer," as commodities took a hit and the equity markets declined in response.

OPTI Canada Inc. and Caesars Entertainment Corp. both experienced losses for the day. OPTI had previously been holding steady for the past few sessions, while Caesars had moved up in the previous session on news of an amend-and-extend.

Nortel Networks Corp., however, finished the day unchanged, though news reports indicated that an auction for the company's patents could bring in up to - or more than - $1 billion.

PMI Group Inc. was also unchanged, though the company announced disappointing earnings.

OPTI faces late-day loss

Late in the day, OPTI Canada's debt began to get hit, according to traders.

"There wasn't a lot of trading but it was definitely quoted lower," a trader said, pegging the 7 7/8% and 8¼% subordinated notes due 2014 at 51½ bid, 52½ offered.

He said that was down a point from the day before.

Another trader said the 8¼% notes were trading in a range of 52 to 53, while the 7 7/8% notes were at 51 bid, 51¾ offered.

"That's a little lower than it should be versus the 8¼% notes," the trader said. "They were [both] probably down a point."

There hasn't been any fresh news out on the Calgary, Alta.-based oilsands producer since last week, when the company reported a narrower first-quarter loss. However, the company also warned that it would likely not meet its 2011 production target of 38,000 to 45,000 barrels per day.

OPTI averaged 25,500 barrels per day in the first quarter, a 36% increase year over year.

Harrah's gives up gains

After gaining ground in the previous session on the back of news regarding an amend-and-extend, Caesars Entertainment's bonds gave back a little.

A trader called the 10% notes due 2018 down "maybe half a point" at 94½ bid, 95 offered. Another source also deemed the debt half a point weaker at 94¾ bid.

The Las Vegas-based casino operator said Wednesday that it was seeking to amend its credit agreement to extend the maturities. The company is looking to move the maturity on the B-1, B-2 and B-3 to Jan. 28, 2018 from Jan. 20, 2015. Additionally, Caesars wants to convert up to $816 million of revolver commitments to extended term loans and extend the remaining revolver commitments to Jan. 28, 2015 from Jan. 28, 2014.

Pricing on the extended term loan will be Libor plus 425 bps and on the extended revolver will be Libor plus 350 bps. Non-extended term loan and revolver pricing is Libor plus 300 bps.

Also, the amendment would allow the company to buy back term loans at any time at prices that could be below par.

Nortel unchanged

Nortel Networks' notes were unchanged on the day despite talk that an auction for the bankrupt company's patent portfolio could garner bids up to $1 billion or more.

A trader said the 10¾% notes due 2016 were unchanged at 90¾ bid, 91 3/8 offered.

Google Inc. has already submitted a $900 million bid for the patents. RPX Corp. and Research In Motion Ltd. are reported to be considering throwing their hats in the ring as well.

The Toronto-based telecommunications company filed for bankruptcy in January 2009.

PMI steady despite loss

A trader said "some people were asking" about PMI Group debt after the company's earnings release.

Still, there was "not much activity," the trader said, even as the stock declined and credit default swaps rose.

"In theory, the bonds should have been down," the trader said. However, he called the 6 5/8% notes due 2036 unchanged at 63 bid, 64 offered.

The mortgage insurer posted a loss of $126.8 million, or 79 cents per share, for the first quarter. The loss marked the 15th consecutive quarterly loss for the company.

The company also said that its losses might result in a breach of compliance on regulatory standards.

Sorenson slips

A trader heard Sorenson Communications Inc.'s 10½% notes due 2015 quoted down a half-point, at 73½ bid, 74½ offered.

There was no fresh news seen out about the Salt Lake City-based company, which provides equipment and services allowing the hearing impaired to access telephone systems.

Paul Deckelman contributed to this article

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