CIT holding on; MGM mixed ahead of earnings; Nortel notes unchanged; Royal steady post-numbers

By Stephanie N. Rotondo

Portland, Ore., Nov. 3 - The distressed debt market ended flat Tuesday, traders reported, with very little news to move things around.

"The market kind of closed flat," a trader said. He added that there were "very few markets in the Street, makes it hard to get things started."

"The market has had a run here," said another trader. "People aren't sure if it will continue" or turn backward. Given that, "people are slow to do anything."

Though still trading actively - and dominating headlines - CIT Group Inc. continued to sit around its 68 to 69 plateau "across the board for the most part," a trader said. The company said it intends to fast track its bankruptcy process, and a hearing on its plan is scheduled for early next month.

Meanwhile, MGM Mirage's notes closed the day mixed. The wishy-washy ending could be a result of investors preparing for the company's earnings release later this week.

Nortel Networks Corp.'s bonds stayed about the same as it was learned that Nokia Siemens was considering making a competing offer for the company's Ethernet business. Ciena Corp. currently has the stalking horse bid.

Also, Royal Caribbean Cruises Ltd. announced its financial results Tuesday, lowering its fourth-quarter and full-year projections. Still, the cruise line's debt ended steady.

CIT holding on before plan hearing

CIT Group remained busy Tuesday, though it was "not nearly as active as [Monday]," a trader said.

The debt also remained largely unchanged. Traders saw the bulk of the credit's assorted issues still trading in that 68 bid, 69 offered context, while the 6.10% notes due 2067 held in at 7 bid, 8 offered.

One trader placed the intercompany notes at 63 bid, 64 offered.

Another trader said that activity in CIT was "just the usual - you're seeing pieces trade here and there." He said that the company's 5.20% notes due 2010 traded in a 68 to 69ish context and got as tight as 68 to 68.5 late in the day, with "some pretty good volume" of at least $17 million of the notes having traded.

He said that its 5.60% notes due 2011 had "good volume," and most of it was inside of 95.5 to 96.5. He said that the Trace bond-tracking system showed $23.5 million of the bonds having traded, "so add a couple of million [dollars of trades which don't show up on Trace] to that."

The New York-based company filed for bankruptcy over the weekend and, in a press release announcing the filing, said it was hoping for a quick emergence. According to a release issued Tuesday, it seems that the company will get its wish, as a hearing to consider confirming the company's plan of reorganization was scheduled for Dec. 8.

The bankruptcy judge overseeing the case also allowed some unusual requests at the company's first-day motion hearings. The judge granted a request to allow the company to use intercompany loans in an effort to keep its customers funded.

Elsewhere in the financial realm, a trader saw Royal Bank of Scotland Group plc's 7.64% notes due 2049 trading down to around 44.

MGM mixed before earnings

MGM Mirage's debt traded in a mixed fashion during the session, as investors geared up for the Las Vegas-based casino operator's earnings release later in the week.

One source said the bonds ended a little lower, the 6¾% notes due 2013 at 78 bid, 79 offered, down from 79 bid, 80 offered.

But another source saw the 7 5/8% notes due 2017 finishing unchanged at 71 bid, 72 offered, while the 7½% notes due 2016 were "maybe up a little" at 72.75 bid, 73.5 offered.

MGM will release its third-quarter results on Thursday. A conference call is scheduled for 11 a.m. ET.

Nortel notes unchanged

Nokia Siemens networks might be looking to usurp Ciena Corp. in a bid for Nortel Networks' Ethernet business, according to news reports.

The news, however, did little to move Nortel's bonds. A trader called the floating-rate notes due 2011 unchanged at 55 bid, 56 offered. The 10¾% notes due 2016 were also steady at 56 bid, 57 offered.

According to the reports, Nokia Siemens is looking at the Toronto-based company's Ethernet unit as a way to expand its presence in North America.

As previously reported. Nortel had agreed to sell the unit to Ciena in October. The deal was valued at $521 million.

Royal Caribbean steady post-numbers

Royal Caribbean Cruises lowered its forecast for the fourth quarter amid a decline in bookings. The company also posted a decline in net income for the third quarter.

Despite that, a trader said the company's 7% notes due 2013 were unchanged around 95.

"Odd-lots are trading a little higher, but I would still say its unchanged," he said.

For the quarter, Royal Caribbean saw its income drop to $230.4 million, or $1.07 per share, from $411.9 million, or $1.92 per share. Sales fell 15% to $1.76 billion.

Looking ahead to the fourth quarter, the company forecast a loss of 5 cents per share, with full-year earnings coming in around 70 cents per share.

"Like many other travel companies, we saw more strength than we expected during our peak season but have been experiencing more pricing pressure on some of our traditionally softer fall season sailings," said Richard D. Fain, chairman and chief executive officer, in the earnings release.

"Overall though, the business environment is largely unchanged and stable. We expect the yield deficit to continue to improve in the fourth quarter and we remain optimistic that 2010 will bring year-over-year yield improvement."

Royal Caribbean Cruises is a Miami-based cruise line.

Paul Deckelman contributed to this article.

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