Investors eye new issues, but distressed still firm; Sprint weak on AT&T, T-Mobile news

By Stephanie N. Rotondo

Portland, Ore., March 22 - A bevy of new bond issues - about $5 billion or more on the day, with more to come in the week ahead - took focus away from the secondary trading space on Tuesday, traders reported.

"It was hard to get much to happen," a trader said, away from new issues. "Most secondary trades were directly related to new issues that were coming or that normal bit of stuff people were moving around."

Still, distressed debt was "grinding ever so slightly higher," despite a lack of real action, the trader said.

Trading in Sprint Nextel Corp. on Tuesday was "much less" than trading in the credit on Monday, a source said. The bonds had traded in huge size - and down about 2 to 3 points - on Monday following news that AT&T Inc. was intending to purchase Deutsche Telekom AG's T-Mobile USA unit for $39 billion.

Declines in Sprint paper continued during Tuesday's session, but not near the multi-point losses seen in the previous session.

Meanwhile, Caesars Entertainment Corp.'s debt was active again. But traders called the notes everything from better to worse, with no news out to act as a catalyst.

Dynegy Inc.'s bonds were also mixed on the day, again on no news.

Sprint still under pressure

Sprint Nextel's paper lost a point or two in trading, as investors continued to react to news regarding AT&T's planned purchase of T-Mobile.

A trader said about $30 million of the 6.9% notes due 2019 traded "down a little bit" to 104 bid, 104½ offered. About $10 million to $15 million of the 8¾% notes due 2032 turned over at around 107, which the trader said was "down from yesterday's high," but about the same as Monday's close.

Another trader placed the 6.9% notes at around the 104 level, calling that down a point or two, while the 8 3/8% notes due 2017 fell 1½ points to a 112-113 context.

"So Sprint paper continues to get whacked some," the trader said.

At another desk, the 6% notes due 2016 were seen slipping nearly a point to 101½ bid.

Chatter that Sprint was planning to buy T-Mobile got knocked out of the water after AT&T announced its intent to purchase the unit on Sunday. As a result, bonds of the Overland Park, Kan.-based wireless telecommunications carrier were hammered on Monday, leaving one market source to opine it was mainly investors that had bought paper on the back of rumors Sprint would gain the asset.

Harrahs/Caesars active again

Caesars Entertainment's 10% notes due 2018 were deemed "kind of what they have been" at 90¼ bid, 90¾ offered, a trader said.

He noted that about $20 million of the notes traded.

However, another trader said the bonds "traded up a bit. They traded up yesterday too." He pegged the issue around "90-ish."

And yet another trader called the notes a smidgen lighter at 901/4.

There was no fresh news out on the Las Vegas-based casino operator.

Dynegy ends mixed

A trader said Dynegy's 7¾% note issue due 2019 was "exactly where it was yesterday" at around 763/4.

Another trader saw the 8 3/8% notes due 2016 moving up fractionally to 831/4.

The Houston-based power producer recently warned that it might be forced to file for bankruptcy protection in the second half of the year due to compliance issues.

DirectBuy dives as CFO exits

A trader said DirectBuy Holdings Inc.'s 12% notes due 2017 "got hammered after the company disclosed the [chief financial officer] resigned."

He said the bonds traded down to the low-70s from the low-90s but ended the day in the high-70s.

The trader said the announcement was made at a conference call held Tuesday to discuss the company's recent quarterly results.

"[The] call was only for bondholders, but word got out," he said.

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