Distressed trading limited as investors focus on recent deals, government crisis; NII rebounds

By Stephanie N. Rotondo

Phoenix, Oct. 11 - It was a more subdued day for distressed debt than it had been throughout the week, traders reported Friday.

The overall high-yield market was also somewhat muted, though recent deals from Limited Brands and T-Mobile remained active.

NII Holdings Inc.'s bonds were "rebounding from the lows," one trader said, seeing the 7 5/8% notes due 2021 inch up to 67, while the 10% notes due 2016 moved back up to 91.

Another trader also placed the 10% notes at 91, which he deemed up a quarter-point.

As for other recently topical names, Energy Future Holdings Corp. paper was mixed in Friday trading.

A trader called the 15% notes due 2021 - securities that are linked to Texas Competitive Electric Holdings Co. LLC - down almost a point at 221/2. Another trader said the 11½% notes due 2020 - also under the Texas Competitive umbrella - ended in a 69 to 70 context.

Meanwhile, a trader said that Caesars Entertainment Corp.'s debt "keeps dipping," with the bonds "down a few points this week."

He pegged the 9% notes due 2020 around 90. Another trader saw that issue at 89 5/8, which he deemed down nearly 1½ points on the day.

The second trader also saw the 10% notes due 2018 leaking a little bit, finishing at 491/4.

All week, the distressed market was being impacted by a partial government shutdown that began Oct. 1. Also playing a factor was an ongoing debt-ceiling debate. The United States is expected to hit its debt limit on Oct. 17 unless a plan can be worked out. Currently on the table is a six-week extension, which would give the government until November to work out a broader plan.

Even if an extension can be agreed upon, however, market sources are of the opinion that it could mean little volatility until an agreement is signed.

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