Freeport tops active list; Casinos gain ground; Sprint notes higher; Tribune auction intrigues market

By Stephanie N. Rotondo and Sara Rosenberg

Portland, Ore., Jan. 6 - The distressed bond market was "on fire again," a trader said Tuesday, as buyers continue to flood the marketplace.

"Everything in rallying," the trader added, calling things up at least 2 to 5 points across the board. "Guys are trying to buy stuff, there is some short covering going on."

"There is better buying across the board," said another source, agreeing that some of the movements were short covering. Still, the lack of inventory is posing a problem, he added.

"Buyers outnumber sellers 3 to 1," he said. "There is very light inventory out there on the Street."

However, even with the increase in volume, there was little rhyme or reason to explain the overall positive tone.

Case in point, Freeport-McMoRan Copper & Gold Inc.'s bonds made the active list - again - with at least $63 million of the company's 8 3/8% notes due 2017 trading. But there was no real news that could have acted as a catalyst.

Meanwhile, MGM Mirage was said to be "leading casinos higher," gaining about 2 points on the day. Again, sources had little explanation for the move, although there was news late Monday that the company was planning on hiring employees to finish its CityCenter project.

Following Monday's tech sector rally, Sprint Nextel Corp.'s debt improved during Tuesday's session. A trader called the bonds 3 to 6 points better overall.

Freeport tops active list

After spending most of the last month of 2008 on the most active list, Freeport-McMoRan's debt once again topped the market, traders reported.

One trader called the 8 3/8% notes due 2017 the "biggest mover," with $63 million changing hands. He called the bonds 2 points higher around 86. Another trader also deemed the paper as "fairly active," quoting the issue at 86 bid, 86.5 offered.

Freeport and Mitsubishi Materials did announce an agreement that would increase copper processing fees by about 70%, news reports stated. Fees for 2009 are $75 a metric ton for smelting ore and 7.5 cents a pound for refining. That compares with $45 and 4.5 cents in 2008 and $60 and 6 cents in 2007.

Freeport is a Phoenix, Ariz.-based copper and gold mining company.

Casinos gain ground

MGM's debt gained 2 to 4 points on the day, causing one trader to say the name was "leading casinos higher."

The trader said the 7 5/8% notes due 2013 closed in the 40s, adding that the issue had been "difficult to trade just a few weeks ago."

Another trader saw that issue at 40.5, 2.5 points better, with about $12 million trading. Yet another source deemed the 6 5/8% notes due 2015 4 points higher at 71 bid.

MGM said late Monday that is was beginning the application process for workers for its CityCenter project. However, a trader said that news was unlikely to have caused the gains, although it was reassuring that the company planned to go ahead with the project.

Elsewhere in the sector, Wynn Las Vegas' 6 5/8% notes due 2014 closed around 85.5, a 7-point advance. One source quoted the debt at 85 bid, 87 offered, noting that the bonds had gained about 10 points in the last two sessions.

Among other casino and hotel operators, Station Casinos Inc.'s 6% notes due 2012 moved up 3 points to close at 24 bid, while Isle of Capri Casinos' 7% notes due 2014 ended 3.25 points better at 46 bid.

Sprint bonds sprint higher

Sprint Nextel's bonds were considered fairly active, firming as much as 6 points on the day, according to a trader.

The trader placed the 6% notes due 2016 at 80 bid, 81 offered, nearly 5 points better. The 8¾% notes due 2032 were also about 5 points higher at 77, while the 7 5/8% notes due 2011 gained more thanr 5 points to close at 92.5 bid, 93 offered.

The activity in Sprint follows a Monday rally in the tech sector, led by Alltel Corp.'s debt. The bonds had gained momentum following word last week that Verizon planned to close on its buyout deal with Alltel on Friday.

Sprint is an Overland Park, Kan.-based wireless network provider.

Tribune auctions intrigue nvestors

Tribune Co.'s loan credit default swap and credit default swap auctions that were held on Tuesday were a big attention grabber as market players were interested in where the clearing prices would fall out. However, the auction did not do much to move the company's bank debt levels in the cash market.

On Tuesday, 11 dealers submitted inside markets, physical settlement requests and limit orders to the Tribune LCDS auction, and 14 dealers submitted inside markets, physical settlement requests and limit orders to the Tribune CDS auction.

The final price for the LCDS auction was 23.75 and the final price for the CDS auction was 1.5, one trader said.

Creditex and Markit acted as the official administrators of the credit event auctions.

"Whole market was focused on Tribune CDS auction and the LCDS auction," the trader remarked.

Although there was a lot of buzz surrounding the Tribune auctions, the company's bank debt levels were pretty much unchanged on the day, with not a lot going on especially after the auctions ended at 3 p.m. ET, traders told Prospect News.

Tribune's term loan B was quoted by one trader at 29½ bid, 31½ offered, and by a second trader at 30 bid, 31 offered, with both claiming the debt to be basically in line with previous levels.

Meanwhile, the company's incremental loan was quoted by one trader at 21 bid, 23 offered, and by a second trader at 23 bid, 24 offered, with both claiming that this debt was also unchanged on the day.

Tribune is a Chicago-based media company.

Lyondell files for Chapter 11

LyondellBasell Industries AF SCA's term loan B debt did not see much of a reaction to the company's Tuesday bankruptcy filing as many had been expecting this event to occur. However, some did think that levels might have seen a slight improvement.

One trader said that the term loan Bs were quoted at 46 bid, 48 offered post filing. "It has traded in that context several times in the past couple of days. It may be trading a little higher post news, but it was kind of baked into yesterday's levels," the trader added.

Two other traders had the term loan B debt quoted more around 45½ bid, 46½ offered, unchanged on the day.

"No big news. Everyone expecting them to file," one of those traders remarked.

Late last year, the company revealed that it hired advisers to help evaluate strategic options, which included a possible bankruptcy filing.

At that time, the company explained that the recent fall in commodity prices and the consequent reduction in its borrowing base, along with changes in demand from customers, placed severe demands on its liquidity.

LyondellBasell is a Netherlands-based polymer, petrochemicals and fuels company.

Broad market stages comeback

"It was definitely a positive day," a trader said. "On the whole, things were up at least 1½ to 2 points."

First Data Corp.'s bonds continued to gain steam, its 9 5/8% notes due 2015 ending at 70.5, a 3.5-point gain.

The rally in the automotive arena seemed to slow somewhat on Tuesday. A trader saw Ford Motor Co.'s bonds flat to up nearly 2 points, its 7 3/8% notes due 2009 at 90 bid, 91 offered, its 7¼% notes due 2011 around 77 and its 8% notes due 2016 around 69.

Meanwhile, GMAC LLC's debt also continued to climb, though not as much so as in previous sessions. The 7¾% notes due 2010 inched up nearly a deuce to 90 bid, 91 offered. GMAC's subsidiary, Residential Capital LLC, saw its 8 7/8% notes due 2015 jump more than 23 points to close at 41.5 bid.

Washington Mutual Inc.'s bank holding paper also gained some ground, its senior issues at 73 bid, 74 offered and its subordinated paper at 33 bid, 34 offered.

Retailers have also staged somewhat of a comeback. A trader called Burlington Coat Factory Warehouse Corp.'s 11 1/8% notes due 2015 firmer at 35 and Neiman Marcus Group Inc.'s 9% notes due 2015 likewise better at 52 bid, 53 offered.

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