Lyondell CAM, new issues gain; Sprint bonds moving up; MGM Mirage firms; broad market stronger

By Stephanie N. Rotondo and Sara Rosenberg

Portland, Ore., March 24 - The distressed debt market continued to feel "better, almost irrationally so," a trader said Wednesday.

"It's really been about new issues," he added, pointing to new paper launched by Lyondell Chemical Co. and Lear Corp.

In Lyondell news, the company's pre-petition CAM moved up in trading, as the court overseeing its bankruptcy case approved the company's exit financing. Traders also saw the new issues trading up by about 2 points, which irked one market player.

Away from the new issues, Sprint Nextel Corp. saw its bonds creeping up in line with the broader marketplace. The longer issues saw the most gains, with the shorter paper improving only about half a point on the day.

MGM Mirage debt traded somewhat actively and slightly better. Again, with no news, it seemed the overall strength of the market had pushed the bonds higher.

Lyondell CAM, new issues gain

LyondellBasell Industries' pre-petition CAM gained some ground in trading with news of court approval of the exit financing at its subsidiary, Lyondell Chemical Co., according to traders.

The CAM was quoted by one trader at 74 bid, 75 offered, up from 73 bid, 74 offered, and by a second trader at 73¾ bid, 74¾ offered, up from 73 bid, 74 offered.

"Maybe it looks cheap to the exit. Maybe just technicals," the first trader said regarding the positive momentum in the CAM.

As was previously reported, Lyondell Chemical's exit financing includes a $500 million six-year senior secured term loan B (Ba3) priced at Libor plus 425 basis points with a 2% Libor floor and an original issue discount of 99, and a $1.75 billion ABL revolver priced at Libor plus 375 bps with a 2% Libor floor.

The company is also getting $2.25 billion and €375 million of 8% secured notes, a new European securitization facility and a $2.8 billion rights offering.

The new issues launched for trading late Wednesday. Both the euro and U.S. notes were priced at par, and traders saw them trading up 2-plus points to 102½ bid, 102¾ offered.

The 2-point gain did not sit well with one market source.

"It's kind of crazy," he said. "If you have mispriced a $2 billion issue by 2 points, that's a lot of money. That's an awful lot of mispricing, I think.

"If I was the corporate treasurer, I'd be pissed," he quipped. "If I was the CEO, I'd fire the treasurer."

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

Sprint bonds moving up

Sprint Nextel bonds ended the day better, according to traders.

"There was not much trading, but they seemed to be better," a trader said. "I assumed it was better with the market."

The trader called the 6% notes due 2016 up half a point at 89½ bid, 90 offered, while the 6 7/8% notes due 2013 were up "a little bit" around 973/4. The longer paper, such as the 6 7/8% notes due 2028 improved the most, he said, placing the issue "up a couple points" around 80 7/8.

Another trader said about $20 million of the 8¾% notes due 2032 changed hands at 92 bid, 93 offered, "up a little bit on the day." The 6 7/8% notes due 2028 meantime saw volume of $10 million to $15 million around that 80 7/8 level.

They traded up between a quarter-point and 1 point and change, he said.

Though overall market firmness could have contributed to the gains, the Overland Park, Kan.-based company's stock (NYSE: S) also improved during trading. The equity gains were attributed to Sprint's Tuesday launch of the world's first 4G phone, as well as the company's planned expansion of its federally-assisted program, which provides free cell phones to low-income households.

Additionally, the company said on Tuesday that it has plans to expand its WiMAX service.

MGM Mirage firms

Las Vegas-based casino operator MGM Mirage saw its debt gaining strength in trading, but with no news out to explain the gains, it was attributed to market firmness.

A trader called the 8½% notes due 2010 "fractionally better" at par bid, 101 offered. He added that about $25 million of the notes traded.

At another desk, a trader deemed the 6¾% notes due 2013 about half a point better at 90 bid, 92 offered. However, he saw the 13% notes due 2013 and the 7 5/8% notes due 2017 unchanged, at 116 bid, 188 offered and 81½ bid, 83½ offered, respectively.

Broad market stronger

Elsewhere in distressed territory, traders reported that General Motors Corp.'s benchmark 8 3/8% notes due 2033 were up over a point at 36 5/8 bid, 37 1/8 offered. One trader noted that the bonds had firmed "on some pretty good size."

Ford Motor Co.'s benchmark 7.45% notes due 2031 meantime ended unchanged at 92½ bid, 93½ offered.

Also, Tronox Worldwide LLC's 9½% notes due 2012 were also trading up, closing around 106.

"Just a few months ago, they were trading at 36," a trader said. "The bonds were in 103ish-104ish area a week or so ago. You'll see them for a day or two, then you don't see them for a couple of weeks, and next thing you know, they're up a couple of points. But there seemed to be a little activity in that [name]."

Radian Group Inc. and MGIC Investment Corp. saw their bonds moving up in line with rise in companies' shares.

A trader said that Radian's stock was "up over $2.50 on a $14 stock, that drove the paper higher in this whole private mortgage (insurer) space, so both MTG and RDN paper were better bid for across the board."

Radian's 7¾% notes due 2011 inched up to around 961/2, while the 5 3/8% notes due 2015 ended in the upper-70s. MBIC's 5 3/8% notes due 2015 meanwhile finished the session at 79 bid, 80 offered.

MGM Studios loan slips

Metro-Goldwyn-Mayer Inc.'s (MGM Studios) term loan headed lower on Wednesday as the company held a lender call, according to traders.

The term loan was quoted by one trader at 47¾ bid, 48½ offered, down from 50 bid, 51 offered, and by a second trader at 4 ¾ bid, 48¾ offered, down from 50¼ bid, 51¼ offered.

The first trader said that the lender call was to discuss an extension of the company's forbearance agreement related to missed interest payments on its credit facility.

MGM Studios is a Los Angeles-based motion picture, television, home video and theatrical production and distribution company.

Paul Deckelman contributed to this article

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.