Calpine Corp.'s second-lien bank debt softened earlier in the week, but recovered only to slip again after the release of the company's quarterly numbers. The first dip came after Duke Energy Corp. announced its intentions to sell its southeast merchant power assets to a unit owned by MatlinPatterson Global Opportunities Partners II. Traders said Calpine paper weakened because the sale valuation came in slightly lower than some expected, which reflected on similar Calpine assets. Calpine's second-lien loan slipped as low as the 91 1/2 range before rebounding to the 92-93 context later in the week.
Then, Calpine released its quarterly numbers on Thursday causing the second-lien loan to tick down again to the 91-92 range. Net loss for the quarter was $71.2 million compared to a net loss of $52 million in the same quarter of last year. The company noted that gross profit decreased by 27% due to lower spark spreads and the costs of new power plants coming on line. The second-lien loan is a portion of the mammoth $3.3 billion in financing that the company put in place last summer via Goldman Sachs. Rick Barraza, Calpine's v.p. of investor relations, did not return calls by press time.