Catalyst Paper climbs, though on no news; Rite Aid retreats from Thursday gains

By Paul Deckelman

New York, April 8 - Catalyst Paper Corp.'s notes were seen several points better on the session, although there was no fresh news out on the Canadian paper manufacturer that would explain the rise in its bonds.

Catalyst sector peer NewPage Corp.'s bonds were higher on apparent sympathy, but again, on no fresh news.

Away from the paper patch, traders saw some activity in Rite Aid Corp.'s bonds, which had firmed on Thursday on the back of not-so-bad quarterly results coming from the third-largest U.S. drugstore chain operator. However, the bonds were seen to have given back some of Thursday's gains.

There was little doing elsewhere in the distressed-debt sphere, bond traders said.

For instance, there was no activity in Nebraska Book Co.'s bonds, which had traded lower earlier in the week.

They also saw no movement in the long bonds of Motors Liquidation Co. - i.e., the "old" General Motors Corp., normally a fairly actively traded issue.

Traders in the bank debt market meantime reported no activity in distressed-company loans.

Catalyst climbs, but no news

A trader said that Catalyst Paper Corp.'s bonds "moved up on the day," seeing the Richmond, B.C.-based paper manufacturer's 7 3/8% notes due 2014 around 74 bid, which he said was up about 3 points on "decent volume," although he was unaware of any news that might explain investors' interest in those bonds.

"So that had a good showing today."

A second trader said he was "not sure why Catalyst popped up, but they seemed to gap up and down" on the 7 3/8s.

"They traded down earlier in the week, and now they're back up." He suggested that after the bonds initially dropped on investors anticipating there might be bad news coming on the company, they went back up as people wanted to buy bonds on the cheap since there is ample cash to be put to work. He saw the bonds ending at 74 bid.

A market source said that more than $13 million of the bonds traded in round-lot transactions, making Catalyst one of the most active purely junk issues - on other words, not a "five-B" type crossover credit. While the bonds initially eased slightly from Thursday's closing level around 71 bid, by the day's end, the source saw them trading back up in a 73-74 context, calling it a 3 point gain.

One of the traders meantime sais that Catalyst Sector peer NewPage Corp.'s 11 3/8% senior secured notes due 2014 were "up a little" on the day, quoting the Miamisburg, Ohio-based coated-paper manufacturer's issue at 101 bid, 101½ offered.

He saw NewPage's 10% notes due 2012 "also up a bit" at 64 bid, 65 offered, though on "not a lot of volume."

He saw no fresh news out on the company.

Rite Aid retreats

Traders saw the bonds of Rite Aid give back some of the gains of ½ to ¾ point which the Camp Hill, Pa.-based third-biggest U.S. drugstore chain operator had notched on Thursday in response to fiscal 2011 fourth-quarter and full-year results that were about steady from the previous years, while containing some positive messages about the company's debt and liquidity picture.

A market source said "they gave up a little of what they gained," seeing the 7.70% notes due 2027 - which had traded at a 67-68 context on Wednesday and which then moved up to 69-70 on Thursday - having come back in on Friday, going out at 68½ bid, 69½ offered.

At another desk, a market source saw Rite Aid's 8 5/8% notes due 2015 down ¼ point on the day at 92 bid, after having gained nearly a full point on Thursday.

A second source there said the notes were down ¾ point at 92.

Rite Aid on Thursday reported revenues of $6.5 billion, as same-store sales trends improved. Still, revenues were about the same as the previous year.

The net loss was slightly lower year over year, down from $208.4 million, or 24 cents per share, the year before.

For the fiscal year, revenues fell just a tad to $25.2 billion from $25.7 billion. The company said the declines were due in part to fewer stores being open than in the previous filing period.

Net loss was also wider at $555.4 billion, versus $506.7 billion the year before.

On their conference call following the release of the numbers, Rite Aid executives noted that the company had cut its net debt levels by almost $150 million from the previous year, and said the company ended the fiscal year with about $1 billion of liquidity, most of it in borrowing availability

OPTI Canada up on week

A trader said that OPTI Canada Inc.'s bonds were "active, still up there among the [volume] leaders and probably trading near their [recent] highs," estimating the Calgary, Alta.-based oil-sands energy producer's 7 7/8% and 8¼% notes due 2014 trading "closer to 55" bid, after having begun the week trading around 53.

"Market strength is what it is," he said - the generally buoyant tone in the overall junk secondary market, rather than any specific positive about the troubled energy company, "nothing specific to the credit, that I can tell."

Autos stay parked

A trader said that Motors Liquidation Co.'s 8 3/8% benchmark bonds due 2033 saw "no activity," staying at 29½ bid, 30½ offered.

A second trader estimated the bonds of the former General Motors Corp. at 30¾ bid, 31¾ offered, but said that they were unchanged on the day.

He also saw the 7.45% bonds due 2031 of GM domestic arch-rival Ford Motor Co. likewise unchanged at 109¼ bid, 109¾ offered.

Nebraska Book holds at lower levels

A trader said that Nebraska Book Co.'s 8 5/8% notes due 2012 were not trading around on Friday, saying he had not seen the textbook distributor's bonds "at all."

Those bonds had last traded on Thursday at 84 bid, 85 offered, which traders called off by 2 or 3 points from the levels in the higher 80s at which those bonds had traded earlier in the week.

On Thursday, Moody's Investors Service lowered its rating on the Lincoln, Neb.-based company, along with the ratings of the parent company, NBC Acquisition Corp.

Among the rating changes, NBC's probability-of-default rating was dropped to Caa3 from Caa2, while Nebraska Book's 8 5/8% notes were lowered to Caa3 from Caa2, with a negative outlook.

Moody's said its action was based on a rising default risk for the company and the likelihood of a restructuring that could be deemed a distressed exchange.

Earlier in the week Standard & Poor's lowered its ratings on the company and its parent on Tuesday, also citing vulnerability to default.

S&P gave the companies a CCC rating, down from B-.

In early March, Nebraska Book said it was in process of putting together a restructuring plan with the help of Rothschild and Kirkland & Ellis LLP. The company said that if it could not come to terms with creditors, it would be forced to file for bankruptcy.

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