NewPage notes see modest gains; Rite Aid bonds holding steady; Amgen, Nuveen debt unfazed

By Stephanie N. Rotondo

Portland, Ore., Aug. 23 - Distressed debt was "for the most part better," a trader said Monday, though total trading volume in the secondary arena was "brutal."

"This made Friday look good," the trader said, noting that volume was "not quite" $1 billion. "So it was definitely a tough day."

One reason for the lack of volume was that many market players were absent, taking time off before summer ends and school starts back up.

Of the day's goings-on, NewPage Corp. was one of the few somewhat active credits. After losing somewhere between 6 and 8 points last week, sources saw the bonds posting modest gains.

And, Rite Aid Corp. notes held in there during the session. Just last week, the company completed a refinancing effort that included the replacement of a credit facility and the issuance of new debt.

NewPage sees modest gain

NewPage bonds moved up a little bit after spending the bulk of last week on a downhill slide.

One trader called the 11 3/8% notes due 2014 up "almost a point" around 81, while another quoted the issue at 80½ bid, 81 offered.

The first trader also saw the 10% notes due 2012 trading around 33. However, those bonds ended about 1½ points weaker, he said.

There hasn't been any fresh news out on the company for some time, but that hasn't stopped investors from putting pressure on the Miamisburg, Ohio-based papermaker's debt.

"The paper is not good," said one market source.

One analyst, who preferred to remain anonymous, said that the management changes announced earlier this summer, coupled with "a huge amount of debt" had resulted in a skittish investment community.

"Investors are realizing [that there are concerns] and seeing that there is that much to go around [in the event of a bankruptcy]," he said.

Rite Aid holding steady

Rite Aid's debt was holding its ground during the first trading session of the week, according to traders.

One trader placed the 9 3/8% notes due 2015 at 811/2, which he deemed unchanged. Another trader echoed that level, also calling it steady on the day.

The second trader also pegged the 9½% notes due 2017 at 801/2.

Last week, the Camp Hill, Pa.-based drugstore chain announced it had completed a refinancing effort that included a new $1.175 billion revolving credit facility due 2015 and the issuance of $650 million in new 8% notes due 2020.

The new credit facility replaced an equal-amount facility that was to have matured in 2012. The facility came at reduced pricing, but also carried a clause that requires Rite Aid to repay or refinance its senior credit facility.

AmGen, Nuveen unfazed

In the financial realm, a trader saw the American General Finance Corp.'s 6.90% notes due 2017 unchanged at 77 bid, 78 offered, apparently not much moved by the news that its corporate parent, the troubled New York insurance giant American International Group, Inc., had made a nearly $4 billion payment to the federal government on its outstanding debt to Uncle Sam, the largest such payment by the company so far.

He said most of AIG's other paper is "well bid-for," trading in the upper-90s-to par area.

At another desk, the American General bonds were quoted down about 7/8 point at just over 78 bid. AIG unit International Lease Finance Group 8¾% notes due 2017 eased to 1021/2, down half a point.

Also, a trader said that Nuveen Investments Inc.'s 10½% notes due 2015 saw "some activity," calling them "pretty much unchanged, or maybe down a half," around 95½ bid, 95¾ offered.

Cenveo nixes National Envelope buy

Cenveo Inc. announced in a news release on Monday that it is no longer looking to purchase bankrupt National Envelope Corp., a Uniondale, N.Y.-based envelope manufacturing company.

The company was marketing via Bank of America a $100 million term loan add-on talked at Libor plus 350 bps with an original issue discount of 96 to fund its bid for National Envelope, and since the acquisition is not going through, the loan is not being done, a market source said.

"Despite offering the unsecured creditors what we believed to be the highest potential recovery out of all the bids at the auction, it became very clear to us that the debtors and the creditors' committee were requiring significantly more in cash and guarantees from Cenveo than from the other bidders and seeking to saddle Cenveo with unacceptable risk that no other bidders were being asked to bear," said Robert G. Burton, Sr., chairman and chief executive officer, in the release.

"Under those circumstances, Cenveo had no interest in acquiring these assets," Burton added.

Cenveo is a Stamford, Conn.-based manager and distributor of print and related products and services.

Sara Rosenberg and Paul Deckelman contributed to this article

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