Ahern Rentals' bonds gain ground as exit nears; ResCap's Ally settlement helps debt strengthen

By Stephanie N. Rotondo

Phoenix, May 15 - Distressed bonds were ceding the spotlight to a busy new issue calendar in the high-yield market on Wednesday.

"They're just piling on these new issues with low coupons," one trader said.

Still, an overall firm tone gave the space a boost.

Ahern Rentals Inc. is nearing the end of its stay in bankruptcy, as a deadline to vote on two opposing reorganization plans passed on Monday. A trader said the company's debt has been climbing as the confirmation hearing nears.

Residential Capital LLC paper was also strong in midweek trading, just one day after the bankrupt former mortgage arm of Ally Financial Inc. announced a settlement with its former parent.

Elsewhere, Caesars Entertainment Corp. bonds were on the rise, though there was no fresh news to act as catalyst.

Ahern heading higher

A trader said Ahern Rentals' debt has been "up dramatically" over the last few days, seeing the 9¼% notes due 2013 at 96 bid, 97 offered.

"They're getting closer to getting out of bankruptcy," he said. "They're even talking a new deal possibly."

The Las Vegas-based construction equipment rental company filed for bankruptcy in December 2011. On Monday, creditors voted on two opposing reorganization plans, one that was proposed by the company and one that was proposed by a group of noteholders.

The noteholder group included several private-equity firms such as Del Mar Master Fund, Feingold O'Keefe Capital, Nomura Corporate Research & Asset Management, Och-Ziff Capital Management Group, Sphere Capital and Wazee Street Capital Management.

The results of Monday's vote will be reviewed at a June 3 confirmation hearing.

ResCap rises

Tuesday's news of a settlement with former parent Ally Financial has given ResCap paper a boost.

On Wednesday, a trader pegged the 9 5/8% notes due 2015 at 107¾ and the 6½% notes due 2013 at 35.

On Tuesday, Minneapolis-based ResCap said it and a group of unsecured creditors had released Ally from potential lawsuits worth billions of dollars. Ally will pay an as-of-yet unspecified amount to ResCap for the release.

The total amount ResCap is slated to receive will be released next week. Ally had previously offered up to $750 million.

Caesars' bonds win

Caesars Entertainment debt was on the active side and firmer, though there was no news to prompt the gains.

A trader saw the 12¾% notes due 2018 moving up over 3 points to end at 71 1/8. The 10% notes due 2018 climbed over a point to close at 62 1/8.

Another market source placed the 10% notes at 62 bid, up over 2 points on the day.

Caesars is a Las Vegas-based casino and hotel operator.

Hot topics

In other recently topical names, Clear Channel Communications Inc.'s LBO bonds "continue to be active," a trader said.

He placed the 11% notes due 2016 at 93 and the 10¾% notes due 2016 at 921/2.

Another trader deemed the 11% notes up just fractionally at 93.

Meanwhile, J.C. Penney Co. Inc.'s 5.65% notes due 2020 inched up a point to 891/2, according to one trader. Another source saw the issue at 89½ bid, up 1½ points.

And, MBIA Inc.'s 0% surplus notes due 2033 were "pretty active," a trader remarked, seeing the paper "continuing to creep up" to around 94.

Edison, Ameren power up

The energy space was largely positive in Wednesday trading.

A trader said Edison Mission Energy's debt - all of which trades on top of one another - firmed to around 60.

The trader also said that Ameren Energy Generating Co.'s 7.95% notes due 2032 were "stronger as well," up a couple points around 78.

However, ATP Oil & Gas Corp.'s 11 7/8% notes due 2015 remained weak, falling to ¾ bid, 1 offered.

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