NewPage heads for higher ground; OPTI languishes at current levels; Clear Channel stages rally

By Stephanie N. Rotondo

Portland, Ore., June 17 - The distressed debt market "started out strong," a trader said Friday.

"Most things are finishing higher, but it kind of petered out mid-way," he added.

The firmer feel to the marketplace helped NewPage Corp.'s debt catch a break. The bonds have been actively trading for the last week and mostly in a downward fashion. Market sources have attributed the recent declines to concerns about an upcoming interest payment.

In other interest payment-related news, OPTI Canada Inc.'s bonds were unchanged to softer. The company said earlier in the week that it would not make a coupon on its subordinated debt, though it did intend to pay the interest on its senior notes.

Clear Channel Communications Inc. closed the week out with a positive tone. The bonds had been falling for most of the week - much like the rest of the market - and managed to stage a modest rally during Friday trading.

NewPage catches break

NewPage's 11 3/8% senior notes due 2014 "rebounded a little bit," a trader said.

He called the issue up a point, trading with a 92 handle.

He said there was "not a lot of trading" in the 10% subordinated notes due 2012, "but they were certainly quoted higher" at 30½ bid, 31 offered.

"Short covering is my guess," he said when asked what had caused the gains. He also noted that the "stock market was up a good bit of the day."

Another trader called the 11 3/8% notes 1½ points higher at 921/2.

The debt had been on the decline recently - and in good sized dealings - as investors worried over a looming coupon. There is a $100.7 million coupon coming due June 30 on the senior notes.

Additionally, with the 10% notes coming due next year, the Miamisburg, Ohio-based papermaker must either refinance or repay the debt or face the acceleration of its $500 million revolving credit facility.

OPTI still sinking

A trader said OPTI Canada's 7 7/8% and 8¼% note due 2014 were weaker, trading around 40.

Another trader saw the 8¼% notes losing a point to 401/2.

A third trader said the subs were "still" trading around 40½ bid, 41 offered.

The bonds are trading flat, or without accrued interest.

The Calgary, Alta.-based oilsands producer said late Tuesday that it was skipping the $71 million payment on the subordinated issues, though it did intend to make a $24 million payment on its 9% first-lien notes due 2012.

The company has 30 days to make the payment on the subs or else it will be in default.

S&P then dropped its long-term corporate credit rating on the company to SD from CCC-.

The rating on the second-lien debt was also dropped to D from CCC.

As of June 15, OPTI has C$220 million in cash and equivalents, the company said in a statement. There is also $73 million available in an interest reserve account.

OPTI said it was continuing to work with Lazard Freres & Co. LLC, Scotia Waterous Inc. and TD Securities Inc. to develop a strategic plan to deal with its overleveraged balance sheet.

Clear Channel rallies

After getting beaten down in the last few sessions, some of Clear Channel Communications' issues experienced "a little bit of a rebound," a trader said.

He saw the 11% notes due 2016 creeping up to "85-ish," while the 10¾% notes due 2016 were "86 and change," up from 85 bid, 85½ offered.

Another trader deemed the 10¾% up nearly a deuce around 86. However, he saw the 5½% notes due 2014 slipping slightly to close around 85.

There has been no fresh news out on the San Antonio-based multimedia company.

Hovnanian perks up

A trader said there "wasn't too much" going on in Hovnanian Enterprises Inc.'s 10 5/8% notes due 2016, though he noted that the bonds were "maybe a little bit better."

He pegged the notes at 97¾ bid, 98 offered.

Another trader called the paper a point higher at 973/4.

Hovnanian is a Red Bank, N.J.-based homebuilder.

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