Stratosphere's Debt Declines; ValuJet Rallies on FAA News
May 12, 2011
Fifield's 14 1/4 first mortgage notes due 2017 dropped to 81 from 84 1/2 early Friday. Stratosphere cited an anticipated cash shortfall and the need to restructure existing debt, but added that suspension of construction won't affect ongoing operations or guests visiting the current complex. Meanwhile, ValuJet's 10 1/4% senior notes due 2016 rose 1 1/2 point to 88 1/2 Friday on Thursday's news that the Federal Aviation Administration is returning its operating certificate and the Department of Transportation is issuing a show-cause order concluding that the airline is fit to fly. ValuJet's has been grounded since June. Still, Standard & Poor's Ratings Group announced Friday that ValuJet's single-B-minus corporate credit rating and triple-C-plus senior unsecured debt rating remains on CreditWatch with negative implications. Spreads of NationsBank's debt were unchanged to 0.01 percentage point wider on news of a definitive merger agreement with Boatmen's Bancshares Inc., traders said. NationsBank's 6 1/2% subordinate notes due 2021 were quoted at a spread of 0.68 percentage point above Treasurys, and the 7 1/4% subordinate notes due 2025 were quoted at a spread of 0.88 percentage point above Treasurys. Spreads of Boatmen's Bancshares' debt were unchanged. After the merger, NationsBank will have combined assets of about $230 billion, $20 billion in shareholders' equity and a market capitalization of $33 billion. Prices of TransTexas Gas's 11.5% senior secured debentures due 2017 stabilized Friday after jumping two points to 105 Thursday. The Houston, Texas, utility has hired Jefferies & Co. and First Union Corp. to assist in the sale of specific assets, the company said in a release. The potential use of proceeds includes general corporate purposes and a repurchase of its 11.5% senior secured notes due 2017. Elsewhere, junk bonds prices were flat despite a drop in Treasurys, and investment-grade spreads were largely unchanged, traders said, noting extremely light trading. The primary markets -- nearly dormant this week -- should begin to rejuvenate after Labor Day, syndicate officials said. High-grade desks expect new issuance this fall to be healthy, but not extraordinary, with a spate of supply in the second and third weeks of the month. Yankee issuance should rise with the lion's share coming from Asia, some also noted. Australia & New Zealand Banking Group, a major Australian bank, is said to be preparing an intermediate maturity debt sale for next week, syndicate officials said. Officials at lead underwriter Merrill Lynch & Co. weren't immediately available for comment. Meantime, prospective deals are once again filling up the high-yield calendar, syndicate officials said. Issuers expected to market deals in September include Goss Graphic System, Gray Communications Systems, Flores & Rucks, Bradford Mccomb and MT Acquisitions.
