Rite Aid, Neiman boosted; Claire's debt stronger; First Data loan improves; Freescale runs up

By Stephanie N. Rotondo and Sara Rosenberg

Portland, Ore., Sept. 11 - The market continued to be strong Friday, but one distressed sector in particular benefitted from the strength.

During the recent market rally, traders have reported that the retail space continued to gain ground, though trading activity was usually thin. On Friday, however, at least one retailer made the most active list.

Rite Aid Corp.'s debt was among the day's big movers, though there was no name specific news to cause the volume. Market sources saw the pharmacy chain's bonds improving by as much as 5 points on the day.

Neiman Marcus Group Inc. and Claire's Store's Inc. were also the subject of investor interest and continued their upward momentum.

Away from retail, First Data Corp.'s bank debt was seen heading higher, though there was no news to explain the move. One source opined that the rally was due to new players dipping into the name.

For most of the week, Freescale Semiconductor Inc.'s notes posted gains and Friday was no different. The company's bonds first started trending higher on news that workers were being rehired in an attempt to fill a recent influx of orders.

Rite Aid, Neiman boosted

Traders are seeing investors swooping in to take advantage of the recent market rally and their sector of choice appears to be the retail space.

One trader - speaking specifically about activity in Rite Aid, though it also applies to the sector generally - said that investors are "encouraged by the current economy," and are therefore looking at cheaper credits, i.e. retailers.

"People are just scrambling to buy stuff," said another trader.

That surge in investor interest was given credit for gains in Rite Aid's debt on Friday, as well as continued upward momentum in Neiman Marcus.

Rite Aid's bonds were one of the day's most active credits, and one trader noted that the 9½% notes due 2017 made the day's top five most active bonds.

The trader said the issue started trading at its Thursday closing levels of 74.5 bid, 75 offered, but soon moved up to around 78.

At another desk, a trader said about $30- to $40-odd million of the notes traded at 78.25, which he deemed "up a couple points."

Another source saw the 8 5/8% notes due 2015 gaining 5 points to close at 79.5 bid.

In Neiman's bonds, a trader quoted the debt generically at 78 bid, 79 offered.

"So that's up a little bit," he said.

Another market player called the 10 3/8% notes due 2015 about a point better at 78 bid.

Earlier in the week, the Dallas-based retailer reported its quarterly numbers and since then, the debt has continued to climb.

Claire's bank debt stronger

And in other recent results reporters, Claire's Stores' term loan B was once again higher by a couple of points in trading as it continued to be spurred on by the recent better-than-expected second quarter results that were announced by the company, according to traders.

The term loan B was quoted by one trader at 72¾ bid, 73¾ offered, up from 71 bid, 72 offered context on Thursday and by a second trader at 72¾ bid, 73½ offered, up from 70½ bid, 71½ offered. Prior to the earnings news, the debt was seen in the 66¾ bid, 68 1/8 offered area.

For the quarter, the company reported a net loss of 3.7 million, versus a net loss of $16.9 million in the second quarter of 2008.

Net sales for the quarter were $314.2 million, down 12.7% from $360 million in the comparable period last year.

Adjusted EBITDA for the second quarter was $50.5 million, compared with $58.1 million in the prior year.

Claire's is a Pembroke Pines, Fla.-based specialty retailer of value-priced fashion accessories and jewelry for girls and young women.

Among other names in the retail space, Bon-Ton Stores Inc.'s 10¼% notes due 2014 moved higher to 65, according to a trader, while Michael's Stores Inc.'s 11 3/8% notes due 2016 improved to the 92 level.

"A lot of retailers are continuing to move up," a trader remarked.

First Data loan improves

First Data's term loan B-2 was better on Friday, although there was no credit-specific news seen behind the movement, according to traders.

The term loan B-2 was quoted by one trader at 86 bid, 86½ offered, up from the 85 to 85¼ bid, 85½ to 85¾ offered context on Thursday, and by a second trader at 86¼ bid, 87 offered, up from 84¾ bid, 85½ offered.

"Guessing it has something to do with new guys coming in," the trader remarked. "What else is going to push this thing up. Everyone already owns this. Got to be new guys."

First Data is a Greenwood Village, Colo.-based provider of electronic commerce and payment services.

Freescale continues to climb

Freescale Semiconductor's bonds finished out the week still higher, as news regarding the rehiring of workers pushed the debt upward.

A trader said the 8 7/8% notes due 2014 were "up a bunch from yesterday" at 77 bid, 79 offered. However, he added that there was "not a lot of it trading."

Another trader said he was seeing better bids, though not much trades. He pegged the bonds around the 77.5 mark, compared with 75 bid, 76 offered previously.

Yet another trader said the bonds "continue to move up," placing them around 77.

"That's up a few points," he said.

Freescale is an Austin, Texas-based chipmaker.

Broad market remains firm

In the wider world of distressed, a trader saw Visteon Corp.'s 7% notes due 2014 moving up 3 points to around 11, on no news.

General Growth Properties Inc.'s 7.2% notes due 2012 were also better at 82.5.

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