Caesars second-lien agreement expires; iHeart debt declines; Toys gains; Abengoa drifts lower

By Stephanie N. Rotondo

Phoenix, Sept. 21 – The distressed debt arena ended Monday’s session with a weaker tone.

Caesars Entertainment Corp. said during the session that its restructuring agreement with second-lien bondholders of Caesars Entertainment Operating Co. Inc. expired on Friday. Come Monday trading, the second-lien issues were losing ground.

Meanwhile, iHeart Media Inc. paper was also weaker, though in that instance, there was no news to act as a catalyst. Traders noted that the 10% notes due 2018 got smacked down a fair bit, with one speculating that it was due to losses seen in the 14% notes due 2021 on Friday.

Toys “R” Us. Inc., however, managed to buck the day’s trend. The bonds were seen mostly better on the day – nearly a week after the company reported a narrower quarterly loss.

A conference call to discuss said results was held Monday.

Caesars’ bonds falter

A restructuring agreement between Caesars Entertainment’s bankrupt operating company and its second-lien bondholders expired on Friday. While the Las Vegas-based casino operator said it was continuing to speak with the group – and act as if the agreement was in place – the opco’s second-lien issues softened on Monday.

One trader saw the 10% notes due 2018 fell over half a point to 33½. Another market source called that issue off over a point at 33½.

The expiration of the agreement has no bearing on the deal with the opco and first-lien noteholders and bank lenders, the company noted.

iHeart weakens

A trader said iHeart Media’s 10% notes due 2018 were “down smartly,” dropping 6 points to 62¼.

The trader said the decline was “extreme” when compared to other issues, though they were also lower.

He saw the 9% notes due 2022 off a quarter-point at 84¾, the 9% notes due 2021 down a point at 85½ and the 9% notes due 2019 almost a point lower at 89¼.

Another trader said the name was “definitely weaker,” seeing the 10% notes dropping to 62 from a 70 to 71 context about a week ago.

“I think the 10s traded down in sympathy” with the 14% notes due 2021, which “drifted from the lower-50s to 47 on Friday.”

The second trader said he had not heard of anything specific to cause the weakness, though he remarked that it was a “high-beta name” and “when CCCs fall out of favor, they tend to get hit.”

The trader also noted that he “heard the CDS was getting wider.”

iHeart is a San Antonio-based multimedia company.

Toys’ debt rises

Toys “R” Us bonds were seen improving Monday as the company held a conference call to discuss its second-quarter results.

One trader called the 7 3/8% notes due 2018 half a point higher at 68½. Another market source deemed the issue up nearly 2 points at 67¾.

However, a third source said the bonds were trading in a 67½ to 68 context, which he said was “kind of where it’s been.”

The Wayne, N.J.-based toy retailer said on Sept. 15 that its net loss for the 13 weeks ended Aug. 1 shrunk to $99 million from $148 million the year before. Sales dropped to $2.29 billion from $2.44 billion.

The sales decline was attributed in large part to a stronger dollar.

Same-store sales fell 2.5% among domestic stores, while they rose 3.3% internationally.

Gross margin improved to 38.2% from 37.5%.

In Monday’s call, the company noted that liquidity was about $1 billion.

The company also said in its earnings release that it was hiring fewer workers for the 2015 holiday season.

Abengoa ‘down a good bit’

In the emerging market arena, Abengoa SA bonds were “supposedly down a good bit,” a trader said, though he had not seen any markets.

Another market source saw odd-lots of the 8 7/8% notes due 2017 trading around 32. Over a week ago, round-lots were trading around 52½.

The 7% notes due 2019 linked to Abengoa Yield plc – a total return company focused on renewable energy and sponsored by Seville, Spain-based Abengoa – meantime were seen falling 3½ points “from early September,” a trader said, ending at 87.

A second trader echoed that level.

Bloomberg reported Monday that Abengoa’s euro-denominated debt took a hit after El Confidencial – a Spanish news website – reported that HSBC Holdings plc had pulled its support for a capital increase.

HSBC was underwriting €120 million of a €650 million stock sale last week. Banco Santander SA and Credit Agricole SA were also participating in the deal.

Oi bonds fall

Also in the emerging market space, Brazilian telecom Oi saw its debt take a hit after it was reported by a local paper that the company had hired NM Rothschild & Sons (Brasil) to look into restructuring options.

However, while the company said it had in fact hired the advisors, it was not to restructure its debt, but to maximize resources from the sale of PT Portugal SGPS in order to improve its debt profile.

Still, the bonds ended lower.

The 5¾% notes due 2022 slipped 6 points to 58 7/8, according to a market source. The 5½% notes due 2020 declined over 5 points to 69½.

© 2015 Prospect News.
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