Visteon notes gyrate during session; NewPage debt up on Domtar news; financials end mostly firm

By Stephanie N. Rotondo

Portland, Ore., March 16 - The distressed debt market "still has a really good underlying strength to it," a market source said Tuesday.

Though that meant a reasonably firm day for distressed credits, another source noted that there were "more sellers than buyers."

Visteon Corp.'s bonds gyrated throughout Tuesday's session, as investors reacted to the company's amended plan of reorganization. The bonds started the day weaker, but managed to end only marginally softer from the day before.

There was definite strength in NewPage Corp.'s debt, as the company announced it would buy some assets from Domtar Corp. Domtar is planning to exit the coated paper business.

Meanwhile, financials - such as Washington Mutual Inc. and Lehman Brothers Holdings Inc. - were mostly firm across the board, according to traders.

And, Lyondell Chemical Co.'s new term loan - which launched Monday - is reportedly garnering a lot of interest.

Visteon notes gyrate

Visteon bonds came off of their intra-day lows, still ending somewhat lower in the wake of the company's amended reorganization plan filing.

A trader called the 7% notes due 2014 "active," seeing them close "down a couple points" around 843/4. He pegged the 8¼% notes due 2010 around 83.

"That's a nice credit," he said.

"Everybody was calling around trying to figure it out," another market source said of the bonds. However, he noted that he "would have thought more traded."

The source saw about $20 million of the 7% notes change hands, finishing the session at that 84¾ mark. He added that "less than $10 million" of the 8¼% notes moved at 83.

Yet another trader said that the bonds "traded off initially," with the bonds hitting low-ticks in the high-70s. But by the end of business, "they almost came back all the way," quoting the debt at 84 bid, 85 offered. He called that down 1 to 2 points from Monday's closing levels.

Amended plan of reorganization

Visteon's amended plan of reorganization sought to reflect the improvements in the company's balance sheet, as well as improvements in the auto industry as a whole.

According to the terms of the plan, term lenders holding $1.629 billion in secured claims will receive 85% of equity in the new reorganized company.

However, while the Van Buren Township, Mich.-based automotive parts supplier said the new plan's recoveries were a significant improvement over the original plan, bondholders still get left with little.

Holders of the 12¼% senior notes will divide 6% of the equity among themselves, resulting in recovery of less than 50% of face value. Other noteholders - as well as those with non-trade claims - will get another 9% of equity, a 20% recovery.

Existing equity holders will get nothing, which is usually the case in bankruptcy filings.

Elsewhere in the autosphere, General Motors Corp.'s 8 3/8% notes due 2033 remained active, holding its 33¼ bid, 33½ offered level.

"It still feels like there are better buyers around for that one," a trader said.

NewPage up on Domtar news

Miamisburg, Ohio-based papermaker NewPage saw its bonds gaining ground following news that the company would purchase some assets of Domtar Corp.

A trader called the 11 3/8% notes due 2014 up half a point, trading with a 98 handle. The 10% notes due 2012 wee seen at 65, while the 12% notes due 2013 were placed around 333/4.

"I think that's up a point or two," he said.

At another desk, a source said about $15 million of the 11 3/8% notes traded, also with a 98 handle.

And, another trader pegged the 10% notes at "+/- 65," versus 63 bid, 64 offered on Monday.

"So that's about a point better," he said.

NewPage announced it had entered into an agreement with Domtar to purchase its coated paper business and customer lists.

"The purchase follows Domtar's decision to exit this business and close its Columbus, Miss., paper mill," NewPage said in a press release.

The transaction is expected to settle sometime in April.

Financials mostly firm

In the financial realm, Washington Mutual's senior paper - like the 5.55% notes due 2010 - were a "smidge better," a trader said, around 44. The bonds had given back some gains on Monday.

Lehman Brothers' bonds meantime ended "about a point better on the day," the trader said, around 24.

And, First Data Corp.'s 10.55% notes due 2015 closed "kind of right where it has been," a source said, at 84 bid, 84½ offered. He noted that "probably $20 million" of notes traded.

Lyondell loan in demand

Chatter is that Lyondell Chemical's $1 billion six-year senior secured term loan B (Ba3) is already seeing "big demand" with a lot of orders in since launching to investors this past Monday, according to a market source.

The term loan B is being talked in the Libor plus 425 bps area with a 2% Libor floor and an original issue discount that is still to be determined. Rumor is that the discount will come out sometime next week.

Covenants under the term loan B include a maximum first-lien leverage ratio and a minimum interest coverage ratio.

UBS, Bank of America, Barclays, Citigroup, Credit Suisse, Deutsche Bank, JPMorgan, Morgan Stanley and Wells Fargo are the joint bookrunners on the term loan B, and they are asking for commitments by late in the week of March 22.

Lyondell's $2.75 billion credit facility also includes a $1.75 billion ABL revolver that is being talked at Libor plus 375 bps with a 2% Libor floor.

Citigroup is the left lead on the ABL revolver.

Proceeds from the credit facility, $2.25 billion of 71/2-year senior secured notes, a new European securitization facility and a $2.8 billion rights offering will be used to repay and replace existing debt, including the company's debtor-in-possession facilities and an existing European securitization facility and to make related payments, when the company exits bankruptcy.

The confirmation hearing on the company's plan of reorganization will begin April 23.

Lyondell is a U.S. subsidiary of LyondellBasell Industries AF SCA, a Netherlands-based polymer, petrochemicals and fuels company.

Broad market mixed

In the rest of distressed debt land, Clear Channel Communications Inc.'s 11% notes due 2016 were "up about a point," a trader said, at 72 bid, 73 offered.

However, the trader said that Energy Future Holdings Corp.'s 10 7/8% notes due 2017 were 1½ points weaker around 783/4.

Another source saw about $10 million of Residential Capital LLC's 9 5/8% notes due 2015 trade around 99.

Sara Rosenberg contributed to this article

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