Momentive bond trading 'volatile' as creditors hire advisors; NII debt stays weak pre-earnings

By Stephanie N. Rotondo

Phoenix, Feb. 25 - Momentive Performance Materials Inc. was the distressed debt nom du jour Tuesday, as the market learned that creditors were preparing for a restructuring.

"It was another volatile day and move for Momentive," one trader said. He called the 11½% notes due 2016 "sharply lower" at 35, which was off 10 points from the previous session, but up a couple points from the day's low around 311/2.

As for the company's other issues, the 9% notes due 2021 slipped just a point to 89, while the 8 7/8% notes due 2020 inched up slightly to 1063/4.

Another trader deemed the 11½% notes off 10 to 15 points, also placing the issue around 35, which compared to a 50 to 51 context on Monday.

The trader also saw the 9% notes off a point at 89 and the 8 7/8% notes "pretty much unchanged" at 1063/4.

According to a Bloomberg report, the 11½% subordinated notes were hitting their lowest level since 2009 as holders of said notes hired Blackstone Group LP and Stroock & Stroock & Lavan LLP as restructuring advisors.

Last week, holders of the 9% second-lien notes reportedly hired Houlihan Lokey and Milbank, Tweed, Hadley & McCloy LLP as advisors. Both hirings come after Standard & Poor's cut the company's rating to CCC- on Feb. 11.

S&P also said that a default or restructuring was likely in the near term.

Still, with the debt not maturing until 2016 at the earliest, the company has time to work out a favorable deal in regards to its about $3.3 billion debt load.

Elsewhere in the world of distressed, NII Holdings Inc. bonds continued to come off recent highs ahead of the company's earnings release on Friday.

A trader saw the 7 5/8% notes due 2021 at 433/4, down almost 2 points, as the 8 7/8% notes due 2019 dropped 1½ points to 52 1/8.

In the coal sector, Walter Energy Inc.'s 8½% notes due 2021 dipped half a point to 721/4. Arch Coal Inc. meantime saw its 7¼% notes due 2021 lose half a point to end at 721/4.

Alpha Natural Resources Inc.'s 6¼% notes due 2021 rose a touch to 84½ and the 6% notes due 2019 edged down slightly to 851/4.

Paul Deckelman contributed to this article

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