Rite Aid bonds holding steady; GM, GMAC paper mostly unchanged; Tropicana, Law Vegas Sands quiet

By Stephanie N. Rotondo

Portland, Ore., Nov. 21 - Distressed bond traders saw would-be investors shying away from distressed territory Friday, following massive losses racked up on Thursday.

"Nobody did a lot of stuff," a trader said. "I think people are just trying to get out of the week unscathed, or no more scathed than they have already been."

"It was on the quiet side, given what happened yesterday," said another trader. "The market is still just very hesitant. Nobody is buying the rally. Everyone is just very, very cautious."

Even as the stock market rallied, distressed bonds were largely deemed unchanged on the day.

"Most stuff was about the same as yesterday," a trader said.

Rite Aid Corp.'s bonds fell in line with that trend, closing the session at about the same levels they closed on Thursday. The bonds held steady as the company told an audience at Bank of America's Credit Conference that is looking to refinance some of its bank debt by early 2010.

Meanwhile, General Motors Corp. and GMAC LLC paper also held in there, despite reports that President-elect Barack Obama was looking into pre-packaged bankruptcies for the Big Three. However, as most GM and GMAC paper was quoted on the wide side Thursday, traders saw markets narrowing inside those larger quotes.

In the world of casinos, traders saw little activity in Tropicana Entertainment LLC's debt. The company is looking to cancel a pending asset sale.

Las Vegas Sands Corp. was once again in the news as an equity analyst cut his earnings estimates through 2010. But bond investors did not seem fazed much and the bonds were on the quieter side.

Rite Aid holding steady

Rite Aid's bonds held their ground as company executives told the audience at the Bank of America Credit Conference that it planned to refinance its revolver and term loan B by early 2010.

A trader quoted the 7½% notes due 2017 at 52.5 bid, 53.5 offered and the 10 3/8% notes due 2016 at 60 bid, 61 offered. He called that "about the same."

But another source saw the paper drifting lower, the 8 5/8% notes due 2015 around 25. Yet another source also called that issue lower, by about 2 points, at 23.75 bid.

At another desk, a trader also saw the 10 3/8% notes at 60 bid, 61 offered, "which is right where they have been." He pegged the 9 3/8% notes due 2015 at 26 bid, 27 offered.

Rite Aid, like most retailers, has suffered as consumer spending has tightened. But Rite Aid was also dealing with integrating the Brooks Eckerd line of stores, which proved to be a more arduous task than they had previously thought.

Still, recent numbers have shown improvements and, at the conference on Friday, Frank Vitrano, Rite Aid's chief executive officer, said he believes that company has enough cash to weather the storm.

In the rest of the retail arena, Michael's Stores Inc.'s 10% notes due 2014 slipped to 29, while Neiman Marcus Group Inc.'s 10 3/8% notes due 2015 "drifted into the high-30s," according to a trader.

Dillard's Inc.'s 7 1/8% notes due 2018 gained more than 5 points to close at 46.5 bid.

GM, GMAC mostly unchanged

GM and GMAC paper held their ground for the most part, as traders saw markets in both names narrowing.

A trader said the 8.10% notes due 2024 were at 10 bid, 15 offered, while the 8% notes due 2031 ended the day at 23 bid, 25 offered.

At another desk, GM's benchmark 8 3/8% notes due 2033 finished at 13 bid, 14 offered, right in the middle of the previous day's market of 12 bid, 19 offered.

"It was pretty much the same in all GM and GMAC paper," the trader said.

Another source called GMAC's 6 7/8% notes due 2012 just over 2 points weaker at 35 bid, while Ford Motor Co.'s 7% notes due 2013 slipped about a deuce to 41 bid.

Activity in all three names died down considerably from Thursday's volumes. GM and Ford have been battered all week as automakers met with lawmakers in an attempt to get federal funding during the economic downturn. GMAC, on the other hand, excited investors with the news that it had officially applied to become a bank holding company.

On Thursday, the Senate chose to delay making any decisions regarding a potential auto industry bailout until early next month. The Big Three were told to develop a business plan to be turned in by Dec. 2. Congress will meet on Dec. 8 to hear the companies' arguments.

Barack Obama is also reportedly looking into pre-packaged bankruptcies for the Detroit companies. Still, some, like House Speaker Nancy Pelosi, think a bankruptcy would be tantamount to "digging a hole far too deep."

As GM, in particular, struggles to stay afloat, the company has announced another round of production cuts. GM also returned two of its leased corporate jets.

Tropicana, Las Vegas Sands quiet

Tropicana Entertainment's debt did not get a lot of action Friday, though the company said it was looking to terminate its pending sale of its Casino Aztar property.

One trader placed the 9 5/8% notes due 2014 at 5.

"That hasn't changed in forever," he said.

Another saw the bonds at 3 bid, 4 offered.

"So about the same price as a quart of juice," he quipped.

Tropicana said in court papers that it seemed unlikely that Resorts Indiana LLC and Eldorado Resorts LLC would be able to close on the sale. The parties had agreed to a purchase price of $190 million in cash plus a $30 million note and an earn-out of up to $25 million. Tropicana said the sale terms have been pressured by lenders exercising their maximum flex rights and gaming approvals have also not been acquired, largely due to financing issues.

Also, some of Tropicana's creditors have objected to the sale and had planned on launching an evidentiary hearing to discuss it. But the process would be a drain on the company, so it was decided that terminating the offer was a better choice.

Meanwhile, an equity analyst cuts his earnings estimates for 2009 and 2010 on Las Vegas Sands. But bonds traders saw little activity in the name.

"Nothing at all, no trades, no prices, no dice," a trader said.

However, according to the Nasd Trace system, the 6 3/8% notes due 2015 traded at 44 bid, 45 offered, down 16 points.

Broad market still soft

MagnaChip Semiconductor LLC's floating-rate notes due 2011 fell to 5.75 bid, 6 offered, a trader said.

"They're going down every day," he added.

Fellow chipmaker NXP BV saw its bonds holding tight despite a downgrade from Moody's Investors Service. A trader pegged the 9½% notes due 2015 at 16 bid, 17 offered, versus 15 bid, 20 offered the day before.

Lehman Brothers Holdings' senior paper was seen drifting lower to around 10, while Washington Mutual Inc.'s senior holding company paper slipped to 59 and the subordinated issues fell to 20.

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