Linens n'Things closing more stores, bonds slip; Idearc debt dips; Ply Gem new issue declines

By Stephanie N. Rotondo

Portland, Ore., July 7 - The distressed bond market reopened Monday after the long weekend to what one trader called a "mini buyer's strike."

The trader was referring to the thin trading volumes of the day and very little news to spark any investor interest. The trader added that a "weird drop in the equities" reinforced liquidity concerns - thus the market's hesitation.

Following the decline in the stocks, bonds were also largely lower. Linens n'Things Inc. bonds dipped slightly during the session, though retailers were generally called unchanged. According to court papers filed last week, Linens is seeking approval to close more of its underperforming stores.

Meanwhile, Idearc Inc.'s debt continued its slow but steady descent. Market players have stated that a deteriorating economy - and the resulting slip in advertising revenues - has weighed on the phonebook publisher. Later this month, the market will be able to see just how much when the company releases its quarterly financials.

In early June, Ply Gem Industries Inc. set its new issue upon the marketplace. Since then, the paper has lost as much as 8 points. The company has taken a hit amid the housing slump that took hold last summer.

Linens to close more stores

Bankrupt Linens n'Things is looking to close more stores to save cash and reduce its debt.

A trader quoted the Clifton, N.J.-based retailer's floating-rate notes due 2014 at 31.75 bid, 33.5 offered, while another pegged the paper at 32 bid, 33 offered, which he deemed lower.

In court documents filed Thursday, Linens asked the bankruptcy court to approve the closure of 87 underperforming stores. That brings the total number of stores liquidating to 207.

The company said that the additional closures will reduce administrative costs, and proceeds from the sales will be used to pay down existing debt.

Elsewhere in the retail sector, Burlington Coat Factory Warehouse Corp.'s 11 1/8% notes due 2015 were seen at 80.5 bid, 82.5 offered. Claire's Stores Inc.'s 9¼% notes due 2015 were called unchanged at 52 bid, 54 offered.

Idearc dips

Idearc's debt was called a "smidge lower" by one source as the company prepares to release its financials later this month.

The trader placed the 8% notes due 2016 at 61.5 bid, 62 offered. Another source saw the bonds at 61.75 bid, down nearly a point.

Idearc's bonds have steadily declined in recent weeks. In mid-June, Standard & Poor's downgraded the Yellow Pages publisher, citing concerns about whether the company would be able to stabilize EBITDA amid an economic slowdown.

The Dallas-based company will release its second-quarter results on July 29.

Meanwhile, sector peer Dex Media Inc.'s 8% notes due 2013 lost nearly 2 points to close just under the 72 mark, while Dex parent R.H. Donnelley Corp.'s 6 7/8% notes due 2013 were up 1 point at 59.

Ply Gem new issue loses weight

After about a month on the market, a trader said Ply Gem's recently issued 11¾% senior secured notes due 2013 have lost "7 to 8 points from where they came."

The trader pegged the newer issue at 91 bid, 92 offered.

The bonds entered the marketplace in early June. The company offered $700 million principal amount of the notes and planned to use the new debt to pay off old debt. The bonds were priced at 99.072 with a 12% yield.

Ply Gem is a Cary, N.C.-based producer of residential exterior building products.

Autos losing steam

A trader saw General Motors Corp.'s 8 3/8% bonds due 2033 having fallen to 56.5 bid from prior levels around 58 or 59.

Another said that the GM bonds were up 1.5 points in a 55-57 context, while GMAC LLC's 8% bonds due 2031 were unchanged at 57.5 bid, 58.5 offered. He also saw Ford Motor Co.'s 7.45% bonds due 2031 at 54 bid, 56 offered, up "maybe half" a point.

At another desk, a trader said that "it looked like that stuff opened down 1.5 points," and at the end of the day, "looks like they're down a few." He saw the GMAC 8% notes going home at 57 bid, 58.5 offered after "bouncing all over the lot. [It was a] wild day." He said the bonds had traded around 60 on Thursday and traded at levels between 57 and 60.5," reiterating that the bonds were "kind of all over the lot."

But another trader saw GM's bonds, and GMAC's, "unchanged to off half a point," adding that "there was not really any trading though."

Among some of the shorter-dated paper, GM's 7 1/8% notes due 2013 were quoted down more than 2 points, at the 60 level, while GMAC's 6 7/8% notes due 2012 lost a point to 63, and its 6¾% notes due 2014 closed at 60, down 1.5 points.

Ford Motor's 7% notes due 2013 lost half a point and ended at 71.

Delphi Corp.'s several series of bonds, like its 6.55% notes that were to have been redeemed in 2006, were up a point at 18.

Gaming sector mixed

Casinos ended the session mixed after the long holiday weekend.

A trader saw MGM's 6 5/8% notes due 2015 holding steady at 80.5 bid, 81 offered and Boyd Gaming Corp.'s 7¾% notes due 2012 around 85, which he called "about the same."

At another desk, a source called Harrah's Operating's 5¾% notes due 2017 a point better at 52 bid and Station Casinos' 6% notes due 2012 up half a point at 81 bid.

Yet another source saw Trump Entertainment Resorts Inc.'s 8½% notes due 2015 decline to 59.5.

Paul Deckelman contributed to this article.

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