Distressed trading gets off to slow start as snow blankets East Coast; OPTI remains top trader

By Stephanie N. Rotondo

Portland, Ore., Jan. 27 - Snow "inundated the market" - and New York City and most of the East Coast - on Thursday, resulting in a late start for several distressed players and a no-show for others.

"Late starts...it never really fully gets going," said one market source that didn't make it to his desk until after 9 a.m.

As a result of the slow start and a few empty desks, total trading volumes in the secondary space were "barely over a billion," the source said.

Still, OPTI Canada Inc. continued to be "the bond," as one trader put it. The company's debt traded in good size, though traders gave mixed reports as to how the notes fared pricewise.

Meanwhile, Mohegan Tribal Gaming Authority announced it had hired another financial adviser to address their maturity issues - "and they have many," quipped a source - and also released its first-quarter results. Though the news sparked gains for the bonds, traders said volume was on the thin side.

Rite Aid Corp. was also up on numbers, traders reported. An increase in same-store sales for the month of January helped the bonds move up a tad in "somewhat active' trading, according to a source.

OPTI trades heavy again

OPTI Canada was "definitely the bond again," said a trader.

He saw about $75 million to $80 million of the company's various issues trading, "all kind of right where they have been."

He pegged the 9% notes due 2012 at 98½ bid, 99½ offered. The 7 7/8% notes due 2014 and the 8¼% notes due 2014 were both at 62 bid, 62½ offered.

Of the 7 7/8s, he said they were "maybe a quarter [point] better," while the 8¼% notes were "maybe a quarter [point] worse, which means they are trading right on top of each other now."

Another trader called both the 7 7/8% and 8¼% notes "roughly a point lower," trading with a 62 handle.

OPTI is a Calgary, Alta.-based oilsands producer.

Mohegan bonds gain

Mohegan Tribal Gaming bonds were "up a little bit," but on "not much volume," according to a trader.

He called the 6 1/8% notes due 2013 "up about 1½ points" at 87½ bid, 88 offered.

Another trader said under $10 million of the notes changed hands, also around 871/2.

The Uncasville, Conn.-based tribal gaming authority released its first fiscal quarter results for the period ending Dec. 31 and also said that it had hired Credit Suisse to "assist in the evaluation and implementation of refinancing alternatives," the release said.

The authority had previously hired Blackstone Advisory Partners LP in November to assist with its "strategic planning relating to its debt maturities."

For the quarter, Mohegan reported a 17.1% increase in income from operations, which came to $44.3 million. Net revenues, however, dipped 1.8% from the prior year to $335.6 million.

Gaming revenues slipped 0.7% to $307.7 million and, when separated into slots and table games, the former saw a 3.9% decline and the latter a 7.5% increase.

As of Dec. 31, the Authority has $92.2 million in cash and equivalents, an improvement over the $63.9 million held as of Sept. 30. Mohegan also had $32 million available under its bank credit facility and another $3.3 million available from various credit lines.

Total debt was $1.66 billion, up from $1.64 billion on Sept. 30.

Rite Aid up with numbers

Also on the back of numbers, Rite Aid debt traded up after the company reported a 1.1% increase in same-store sales for the four weeks ending Jan. 22.

"Obviously the market liked [the numbers]," a trader said, noting that the stock was up about 15% on the day as well.

The trader said the 9½% notes due 2017 closed stronger at 86¼ bid, 86½ offered.

Another market source deemed the 8 5/8% notes due 2015 half a point higher at 89½ bid.

The increase in sales came after the Camp Hill, Pa.-based drugstore chain posted a 0.6% increase back in December. That was the first such increase since May 2009.

For the reporting period, Rite Aid reported total sales of $1.91 billion, the same as the year before.

For the 47 weeks ending Jan. 22, same-store sales were down 0.9% and total revenues dropped 2% to $22.68 billion.

Kodak, Nebraska Book steady

In other topical names, Eastman Kodak Co.'s 7¼% notes due 2013 were called unchanged at 93½ bid, 94 offered.

Also, Nebraska Book Co. Inc.'s 10% notes due 2011 were seen at par 3/4, which was "up a teeny bit, but nothing huge. I'd call them flat," a trader said.

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