Trump bonds active, lower; Retailers weaker; Standard Pacific declines; MAAX dips

By Stephanie N. Rotondo

Portland, Ore., Oct. 19 - A retreating equity market and recession worries weighed on the distressed sector Friday, pushing most names down 1 to 2 points across the board.

"There was very light volume," a trader said, calling the day a "bloodbath."

"Very few players stuck around for the carnage," he said. "It would have been a better day if it had never happened."

Another trader deemed the day "lackluster," noting that the market was "drifting 1 to 2 points lower."

"I think people were frozen with the equity doing what it was doing," he said, citing the Dow Jones Industrial Average's nearly 370-point decline. "A lot of people were just sitting on the sidelines."

"Everybody is probably kicking themselves for not selling last week when things were 5 points higher," he added.

"As the stock market melted, our market melted," said another market source.

So in a day where nothing was really going on, Trump Entertainment Resorts Inc.'s bonds were seen falling as much as 3 points on the day and were considered to be relatively active.

Retailers like Linens n'Things Inc. and Bon-Ton Stores Inc. continued to slide further downward. One trader, however, said retail names "hung in there."

Standard Pacific Corp.'s bonds were also continuing their decline, with one trader noting that the bonds have decreased at least 10 points over the week. Within the industry, MAAX Corp.'s bonds fell again, as investors are shying away from the struggling manufacturer of bathroom and spa fixtures.

Trump bonds dip

In an inactive day, Trump Entertainment's 8½% notes due 2015 remained relatively busy, though the bonds fell anywhere from 1 to 3 points on the day.

A trader called the bonds down 1 point at 86.5 bid, 87.25 offered. Another trader deemed the bonds 3 points lower with an 86 bid, noting that the debt had gotten as high as 88 bid, 89 offered.

Elsewhere in the gaming sector, Wimar Operating's 9 5/8% notes due 2015, which operates the Tropicana casino, were called active and "significantly" lower at 72.5 bid, 73.5 offered, down 3 to 4 points on the day. Earlier in the week, the bonds hit a high of 78.25.

At another desk, a trader pegged the bonds at 74.75 bid, 75 offered as of Thursday's close.

A trader attributed the decrease in Wimar's bonds to concerns about bank covenants, adding that the company is highly leveraged. Overall, the Atlantic City gaming market has not been performing well, as recession concerns keep prospective gamblers at home - along with their money.

Retailers weaker

Retailers are continuing to decline, after a week of bad news in the sector prompted most names to dip.

As Bon-Ton released poor quarterly figures and the consumer spending index was weaker, all struggling retail names began to edge lower. With the stock market retreating Friday on recession fears, that trend continued.

A trader quoted Linens n'Things floating-rate notes at 64, adding that they were closer to 71 last week.

"All retailers have retreated from where they were a week ago," he said.

Another trader said the sector was "down a little," with Bon-Ton's 10¼% notes due 2014 closing at 89.5 and Linens n'Things at 64. He also saw Burlington Coat Factory Warehouse Corp.'s 11 1/8% notes due 2014 at 90.5 bid, 91 offered.

But another trader claimed retailers "hung in there" while the rest of the market collapsed around them. He attributed the steadiness in the sector to short covering.

The trader quoted Bon-Ton's debt at 88.75 bid, 89.75 offered, which he said was "not down that much honestly." He pegged Burlington's notes around 91 and Claire's Stores Inc.'s 9 5/8% notes due 2015 at 80.5 bid, 81.5 offered and its 10½% notes due 2017 at 74 bid, 76 offered, down a couple points.

Standard Pacific on the decline

Standard Pacific's bonds were steadily edging lower throughout the week and Friday's trading was no different, a trader said.

The trader said the bonds have lost about 10 points over the week, at a rate of 2 points a day. He quoted the 7% notes due 2015 at 68.5 bid, 70.5 offered, the 6½% notes due 2008 at 71 bid, 72 offered and the 9¼% notes due 2012 at 55 bid, 57 offered.

"Nobody is sticking a bid out there," he said. "In times like this, stuff goes down violently."

Another trader called the 7% notes down a point at 68 bid, 70 offered.

Meanwhile, Technical Olympic USA Inc.'s 9% notes due 2010 closed at 63 bid, 64 offered, while its 10 3/8% notes due 2013 ended the day at 17 bid, 18 offered.

Another trader called the 8¼% notes due 2011 lower by 1 point at 61 bid, 63 offered, while its 9% notes lost 2 points to 62 bid, 64 offered. He added that "all of the juniors," like the 7½% notes due 2015, were unchanged in a 15 bid, 17 offered context.

MAAX drops 6 points

As the housing sector remains troubled, housing-related names are also suffering. MAAX Corp.'s bonds also lost ground over the week after posting poor quarterly numbers - which the company attributed to a weakening housing market.

A trader said the 9¾% notes due 2015 were "getting hit" at 36, which he called down 6 points on the session.

"There's no news out; it just continues to drift lower," the trader said.

Broad market mostly lower

Blockbuster Inc.'s 9% notes due 2012 have been weakening for the past several sessions, a trader said. He placed the notes at 88.25.

"What is going on there?" he asked. He noted that the move might be due to "general malaise" about the industry.

The trader also said that Hines Horticulture Inc.'s 10¼% notes due 2011 "got a little bit of an inspiration," moving higher to close at 75.25.

Delta Air Lines Inc.'s stubs were quoted at 6 bid, 6.875 offered.

At another desk, a trader said Level 3 Communications' bonds have been on the downward slide ever since Monday's announcement that its chief financial officer was resigning. He said the 9¼% notes due 2014 closed with a 95 handle, down 5 points over the week.

The trader also noted that there was "not a ton of activity" in the automotive realm. He called Delphi Corp.'s 6.55% notes that were to have come due last year "down a little" at 97, while Federal-Mogul Corp.'s debt was "on the quiet side." He said the bonds were "probably weaker with the general market" at 90 bid, 90.5 offered.

Movie Gallery Inc.'s 11% notes due 2012 were deemed unchanged at 26 bid, 27 offered.

A trader saw no dealings in Calpine Corp. paper, but at another desk, its 8¾% notes due 2007 were seen down 1 point at 112.

Neff Corp.'s 10% notes due 2015 were 3 points lighter at 69 bid, 71 offered.

A trader said Tembec Inc.'s 8 5/8% notes due 2009 fell half a point to 45 bid, 46 offered, while the 8½% notes due 2011 lost 1 point to 40.

Solo Cup's 8½% notes due 2014 were a point lower at 88 bid, 90 offered.

Paul Deckelman contributed to this article.

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