Sprint paper falls on losses; Rite Aid sees sales go up, bonds gain; GenMar weakens on numbers

By Stephanie N. Rotondo

Portland, Ore., July 28 - With the U.S. debt ceiling negotiations coming down to the wire, investors were hesitant to jump into anything, resulting in subdued volumes for the distressed debt market Thursday.

Still, a trader said the market was "still firm" although "a lot of people were keeping an eye on this whole debt ceiling situation."

"It was fairly slow," said another trader.

Sprint Nextel Corp. and Rite Aid Corp. saw some action, however, as Sprint reported quarterly earnings and Rite Aid released its same-store sales figures for July. Sprint, for its part, posted a wider loss compared with year-earlier numbers, while Rite Aid saw an increase in sales for the month.

In other earnings news, General Maritime Corp.'s debt fell in response to the company's earnings, which were released after the bell Wednesday. The company held a conference call Thursday morning.

Meanwhile, Hovnanian Enterprises Inc.'s bonds continued to falter. The debt took a hit earlier in the week when the U.S Department of Commerce reported a 1% decline in home sales for the month of June.

Sprint posts loss, bonds lose

Overland Park, Kan.-based Sprint Nextel reported a wider second-quarter loss Thursday, resulting in a 1- to 11/2-point loss for the company's bonds, traders reported.

"The bonds were hit at the onset," a trader said. "Most of the activity seemed to be in the long end."

He pegged the 8¾% notes due 2032 with a 110 handle, though he said that was about unchanged.

Another trader, however, quoted the issue at 109 bid, 109½ offered, down "about a point."

A third market source saw the 6% notes due 2016 at par ¾ bid, down about a half-point.

For the quarter, Sprint reported a loss of $847 million, or 28 cents per share. The year before, Sprint posted a net loss of $760 million, or 25 cents per share.

Still, revenues were about 4% better at $8.3 billion.

During the quarter, the company lost 101,000 contract subscribers, likely to AT&T Corp. and Verizon, which both carry the Apple iPhone.

But Sprint did manage to offset those losses by adding 1.1 million new customers, most of which came from Sprint's prepaid and wholesale units.

Rite Aid bonds, sales up

Rite Aid reported a 1.9% same-store sales increase for the four weeks ending July 23, according to a press release.

The upswing helped the company's bonds gain some ground.

One trader said the 6 7/8% notes due 2013 traded up 1½ points to 99, which "left bonds offered." Still, he said he "thought that was a good price."

Another market source placed the 8 5/8% notes due 2015 at 95¾ bid, up 1½ points as well.

At another desk, a trader saw the 9½% notes due 2017 around "93-ish."

"They were active, but it doesn't look like there was too much price difference," he said of the issue.

For July, total sales came to $1.92 billion, up 1.6% year over year. Prescription revenue accounted for 67.6% of total sales.

Year to date, Rite Aid has seen a 1.2% increase in same-store sales. Total sales for the year came to $10.21 billion, up from $10.16 billion in 2010.

Rite Aid is a Camp Hill, Pa.-based drugstore chain.

GenMar falls post-numbers

General Maritime released its second-quarter results after the market closed Wednesday and held a conference call early Thursday. While the oil containership company's debt was steady ahead of the numbers, they lost ground come Thursday's session.

A trader saw the 12% notes due 2017 traded down to around 69. The bonds had been around 72 previously.

For the quarter ending June 30, GenMar posted a wider-than-anticipated net loss of $24 million, or 21 cents per share. That compared with a net loss of $14.3 million, or 25 cents per share, the year before.

Revenues got knocked down 12.2% to $53.6 million.

Analysts polled by Thomson Reuters were expecting a loss of 27 cents per share on revenues of $56.05 million.

"General Maritime has continued to take important steps to strengthen its balance sheet and capital structure, which has enhanced the company's ability to operate in a challenging market environment and improved its future prospects," John Tavlarios, president and chief executive, said in the earnings release.

"During the second quarter and into the current third quarter, General Maritime has completed a number of important transactions aimed at increasing the company's liquidity and financial flexibility."

GenMar is based in New York.

Hovnanian still slipping

A trader said Hovnanian Enterprises' 10 5/8% notes due 2016 experienced "a handful of trades," all between 93½ and 95.

Another source said the debt fell a bit to 93½ bid.

The Red Bank, N.J.-based homebuilders bonds have been declining of late and were further pushed down earlier this week on a weak housing report.

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