Clear Channel trades off; NewPage gains, Capmark up; distressed bond trading mostly quiet

By Paul Deckelman

New York, Aug. 24 - Trading in bonds of distressed companies was seen as quiet on Wednesday, traders said, in line with generally quiet activity in the overall junk bond market.

Here and there, however, notable names did see some action.

Traders said that broadcasting and outdoor advertising company Clear Channel Communications Inc.'s bonds were several points lower, although they saw no fresh news out on the company .

On the upside, paper manufacturer NewPage Corp.'s bonds were seen up by several points, also on no news. NewPage sector peer Catalyst Paper Corp.'s notes, on the other hand, were not much changed.

Another gainer was restructuring commercial lender Capmark Financial Group Inc.

There was little real activity in such well-known names as Caesars Entertainment Corp. and Rite Aid Corp.

There meanwhile was little or no activity seen in the bank debt of distressed companies.

Little activity takes place

A trader said that "there's was not much to tell you about distressed, with activity muted along with the rest of the junk bond market. "I don't see much trading in it - a couple of small pieces here and there.

"It doesn't look like there's much action here."

OPTI Canada improves

A trader said that OPTI Canada Inc. "moved a little," and saw the Calgary, Alta.-based oil-sands energy company's 8¼% notes due 2014 at 63 bid, which he called "up slightly," while its 7 7/8% notes due 2014 were at 63 bid, 63½ offered, up ½ point, and both on "some volume."

A second trader called the bonds of the company - which recently announced that it would be acquired by Chinese energy operator Cnooc Ltd. for $2.1 billion - unchanged on the day.

Clear Channel chopped up

Clear Channel Communications Inc. paper "went on a little ride today," a trader said, seeing the San Antonio, Tex.-based media company's 11% payment-in-kind toggle notes due 2016 "down a couple of points" at 62½ bid, 63½ offered.

There was decent volume on the day" in that particular credit.

He saw the bonds go home between 2 and 2½ points softer.

Its 10¾% cash-pay notes due 2016 % remained anchored around a 66 bid level.

"The 11s are the big name of the day," with over $8 million traded as of mid-afternoon, a market source said. "The 103/4s were quoted lower, but on no activity."

Usually busy Caesars is quiet

A trader said that "the higher-beta names that are usually active in the market are kind of quiet."

For instance, he saw Caesars Entertainment's 10% notes due 2018, "usually on the top of the leader-board" in terms of volume, had only light trading on Wednesday.

"There were more odd-lot trades than round-lot trades in the Las Vegas-based casino giant's most widely traded issue, which he saw as "about unchanged" in the lower 70s. Late in the day, he said, they traded in a 73-74 context, before "drifting up" to the 74 bid level.

A market source at another desk saw those bonds - which on Tuesday had been gyrating around between a low of 70 and a high of 75 - going out up 1 point on the day at 73 bid.

But at another desk, those former Harrah's Operating Co. Inc. bonds - while seen at that same 73 bid level - were described as down 2 points on the day.

NewPage moves up

NewPage was "up a touch," but on thinner volume than has recently been seen in the Miamisburg, Ohio-based coated-paper manufacturer's bonds.

He quoted its 11 3/8% first-lien senior secured notes due 2014 slightly higher on the day at 81 bid, 82 offered, but said that "not more than $5 million traded," well below recent turnover levels for those bonds. "It was just small trades."

A second trader saw the bonds get as good as 83½ bid, 84 offered, which he said was "more like 3 points" to the upside.

He saw NewPage's 10% notes due 2012 remaining in a 12-13 context, "pretty much unchanged, with not as much activity [as in the 11s]."

NewPage sector peer Catalyst Paper Corp.'s 11% notes due 2016 were at 65-66, up 1 point, with "some activity in that today," the first trader said, but its 7 3/8% notes due 2014 were at 28-30 with "no activity - the activity was all in the 11s, but it wasn't a big change."

Rite Aid at rest

A trader said that Rite Aid's paper "has been a little bit active," though he saw no particular change from recent levels in the Camp Hill, Pa.-based Number-3 U.S. drugstore chain operator.

He said that the name traded down on Tuesday, "especially in its more junior bonds" like the 9½% notes due 2017 and 9 3/8% notes due 2015, where were trading around 83 bid and 87 bid, respectively.

"They were kind of active [Tuesday]; I saw quotes today, but I didn't see many trades," he said.

Capmark posts a gain

Among the distressed financial names, a trader said that Capmark Financial Group's 6.30% notes were trading around 53¾ bid, which he called up a point.

There was no fresh news out on the Horsham, Pa.-based commercial real estate finance company, currently reorganizing under Chapter 11. Last week, the company received conditional approval of its joint plan for reorganization from the U.S. Bankruptcy Court in Wilmington, Del., which is overseeing its restructuring.

Also in that sector, a trader said that there was "a little bit of Lehman [Brothers] paper, but no size there - usually there are bigger pieces."

The failed New York-based investment banking company's many series of bonds currently mostly trade in a 22½ to 24½ context.

Richmond, Va.-based insurer Genworth Financial Inc.'s 6.15% notes due 2016 were seen down 3 points on the session at 55 bid, even as the company's New York Stock Exchange-traded shares gained 41 cents, or 6.68%, to end at $6.55. Volume of 9.3 million shares was almost one third above the usual turnover.

Nebraska gets OK, bonds steady

A trader said that he "did not see much activity" Wednesday in Nebraska Book Co.'s 8 5/8% senior subordinated notes due 2012, despite good news on the restructuring front for the Lincoln, Neb.-based college bookstore operator and buyer and seller of used textbooks.

He said that those bonds remained in the same 50-55 context at which they had been quoted on Tuesday.

The company, which sought protection from its bondholders and other creditors via a Chapter 11 filing in Wilmington on June 27, got the court's okay to begin pitching its reorganization plan to its creditors.

While legally necessary, submission of the approved plan is, relatively speaking, almost just a formality.

When it filed for Chapter 11, Nebraska Book said that it had already received the approval from the holders of over 95% of its 8 5/8% notes and more than 75% of its 11% discount notes due 2013.

Under the plan to restructure about $450 million in debt of Nebraska Book's parent, NBC Acquisition Corp., and its affiliates, holders of the $179.2 million of the 8 5/8s would convert their debt into 78% the reorganized company's new equity, $110 million in unsecured notes and a cash payment of $30.6 million.

It is estimated that the noteholders will recoup about 87 cents on the dollar.

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