Idearc active on CDS settlement; NOVA debt drops; General Growth higher; Claire's loan moving up

By Stephanie N. Rotondo

Portland, Ore., April 23 - It was yet another active trading day, traders reported Thursday, and an unusual name led the activity.

Idearc Inc.'s bonds were considered the day's most active. The action came on the back of a credit default swap auction held Thursday. The bonds ended the day weaker in response.

Meanwhile, NOVA Chemicals Corp.'s bonds closed softer, following the company's first-quarter earnings release.

"The numbers weren't too good," a trader said.

General Growth Properties Inc.'s notes moved higher during the session. The movement came despite news that more of the company's subsidiaries had entered Chapter 11 protections.

Claire's Stores Inc. posted its quarterly report as well Thursday. But despite the numbers that were "not good," traders saw the company's bank debt heading upward.

Idearc active on CDS settlement

Idearc's 8% notes due 2016 were deemed the day's "leading trader" by one market source who saw about $27 million of the bonds trading.

The source called the debt off about half a point to 1.75.

But another source pegged the issue at 1.75 bid, 2 1/8 offered, which he said was not "much changed."

The activity in the name came as an auction was held to settle its CDS. According to the final results of the auction, the phonebook publisher's CDS is worth 1¾% of the debt it protects, while the CDS covering the company's loans are worth 38½%.

Idearc filed for bankruptcy on March 31.

NOVA debt drops

NOVA Chemicals' notes fell 2 to 3 points during trading, after the company released its first-quarter results.

A trader called the floating-rate notes due 2013 off 2.5 points at 75, while the 6½% notes due 2012 ended at 88.5. Another trader saw the floaters down about 3 points to around 74.

At another desk, a source placed the 6½% notes at 88.5 bid, calling that down nearly 2 points.

For the first quarter, the company posted a loss of $123 million, or $1.48 per share, compared with a profit of $52 million, or 63 cents per share, the year before.

On an adjusted basis, the company lost $109 million, or $1.31 per share. That compared with adjusted earnings of $73 million, or 88 cents per share, in 2008.

Revenues were also weaker, dropping to $818 million from $1.91 billion.

Still, NOVA has a $250 million credit backstop facility, provided by International petroleum Investment Co., an Abu Dhabi-based energy investment company. Last week, shareholders approved a merger of the two companies at $6.00 per share. The transaction is expected to close in the second quarter.

GGP paper firms

Despite a late Wednesday announcement that more subsidiaries had filed for Chapter 11 protections, General Growth Properties' debt was seen gaining as much as 4.5 points on the day.

A trader called both the 3 5/8% and 8% notes due 2009 better by 4.5 points, at 44.25 and 44 5/8, respectively. He also saw the 5 3/8% notes due 2013 at 43.5, a gain of 3.5 points and the 7.2% notes due 2012 at 43 5/8, about 3 5/8 points stronger day over day.

But another trader saw the notes improving only 1.5 points, quoting the 3 5/8% notes at 43.75 bid, 44.5 offered and the 5 3/8% notes at 43 bid, 44 offered.

The bonds are trading flat, or without accrued interest, since the company filed for Chapter 11 protections.

The Chicago-based real estate investment trust said that certain subsidiaries, including eight of its regional shopping centers, followed in its parent's footsteps and filed for bankruptcy.

"We filed these additional companies under Chapter 11 as part of our overall plan to restructure our debt," stated Adam Metz, chief executive officer, in a statement. "We do not currently contemplate that additional GGP subsidiaries will file for protection, although it is possible that circumstances could change during the restructuring process."

Ford improves, GM declines

Ford Motor's bonds were largely better ahead of the company's earnings release on Friday. But its rival General Motors did not fare as well.

A trader deemed the 7¼% notes due 2011 about 2 points better at 73.5, with around $20 million changing hands. He also saw the 7.45% notes due 2031 at 40.5 and the 6 5/8% notes due 2028 at 37, both a point firmer.

Another trader placed the 7¼% notes at 73 bid, 74 offered, noting "maybe that's up a point." He also saw the 9.3% notes due 2030 at 38 bid, 39 offered.

"I would say they are up slightly to unchanged, depending on which one you are looking at," he said.

But GM's bonds closed a tad lower, traders reported. The first trader placed both the 8¼% notes due 2023 and the benchmark 8 3/8% notes due 2033 at 7 7/8.

The second trader gave a generic quote of 6.5 bid, 8.5 offered.

Dearborn, Mich.-based Ford is expected to report its largest loss in history on Friday. However, it is also largely believed that the company will not need to file for bankruptcy, nor will it need to get access to emergency bailout funds from the government.

Meanwhile, bankruptcy chatter continues to heat up for Detroit-based GM as the U.S. Treasury department has reportedly begun putting together a bankruptcy filing for rival Chrysler LLC. Furthermore, Canada and certain provinces are considering putting up as much as $6 billion for both Chrysler and GM to use in the event of a Chapter 11 filing.

Claire's loan ends higher

Claire's Stores' term loan B gained some ground during the trading session as the company came out with quarterly financials, which according to one trader, were "not good" but since it seems like the company is "trying to generate some cash and pay down some debt," the loan traded up.

The trader quoted the term loan B at 46 bid, 48 offered, up from 45 bid, 47 offered on Wednesday. A second trader also had the term loan B quoted at 46 bid, 48 offered, but he said it was only up from 45½ bid, 47½ offered.

For the fiscal fourth quarter of 2008, which ended on Jan. 31, Claire's reported a net loss of $569.5 million, compared with net income of $15.3 million in the previous year.

Net sales for the quarter were $393 million, a 12.2% decrease from $447.4 million in the 2007 fourth quarter.

And, adjusted EBITDA for the quarter was $76.4 million compared with $114.7 million in the prior year's fourth quarter.

Also on Thursday, Claire's said that it plans on maximizing 2009 cash flow by aggressively pursuing expense savings opportunities, reducing capital expenditures and capitalizing on sales in its existing store base.

At Jan. 31, cash and cash equivalents were $204.6 million, and $194 million continued to be drawn on the company's revolving credit facility.

As was previously disclosed, the company drew the full available amount under the revolver during the 2008 third quarter in order to preserve the availability of the commitment because a member of the facility syndicate, Lehman Brothers, filed for bankruptcy.

The agent bank has not yet found a replacement for Lehman in the facility syndicate, or arranged for the assumption of Lehman's commitment by a creditworthy entity.

The company said that it will continue to assess whether to pay down all or a portion of the outstanding revolver balance based on various factors, including the creditworthiness of other syndicate members and general economic conditions.

Claire's is a specialty retailer of value-priced fashion accessories and jewelry for girls and young women.

Broad market moving up

Elsewhere in the distressed arena, First Data Corp.'s 9 7/8% notes due 2015 inched up nearly half a point to 65.75.

Nuveen Investments Inc.'s 5% notes due 2010 were seen gaining about 5 points to around 81.

"The short squeeze continues," a trader said.

Warner Music Group Corp.'s 9½% notes due 2014 have moved up to 44.5 bid from 37 in the past 10 days, according to a trader. However, he said the 7 3/8% notes due 2014 were "not trading at all."

"So I don't know what is going on with those," he added.

In the housing related world, Hovnanian Enterprises Inc.'s 6 3/8% notes due 2014 were quoted up as much as 4 points on the session, at the 36 level, while the considerably stronger D.R. Horton Inc.'s 6½% notes due 2016 gained 3 points on the day, to move up to the mid-80s.

Real estate operator Realogy Corp.'s 12 3/8% notes due 2015 ended at 24 bid, down more than a point.

Sara Rosenberg and Paul Deckelman contributed to this article.

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