Dynegy, Hovnanian among gainers in generally featureless day; Gymboree, Realogy off

By Paul Deckelman

New York, Sept. 13 - Traders saw a little improvement on Tuesday in the bonds of such recently pressured names as power generator Dynegy Holdings, Inc.

Another gainer on the day, they said, was struggling homebuilder Hovnanian Enterprises Inc.

They didn't see any fresh positive news out about either company and suggested that the movements were in line with the more-or-less random gyrations of many bonds in the larger junk bond market, which moved up on Tuesday from Monday's lower levels but with no real theme or conviction, they said.

And while those names were seen higher, other credits were moving in the opposite direction, among them real estate services company Realogy Corp. and retailer Gymboree Corp.

No fresh news was seen out on either company, although Gymboree's credit ratings were lowered at the end of last week by Moody's Investors Service.

Moody's also downgraded business jet manufacturer Hawker Beechcraft Acquisition Co. LLC; however, the plane maker's bonds were seen unmoved.

And traders were wondering what was developing with Eastman Kodak Co.'s bonds, which have moved up a little from recent lows.

Dynegy does better

Houston-based power generation company Dynegy Holdings' bonds were seen better on the session, although there seemed to be no firm news out on the company

A market source saw Dynegy's 7¾% notes due 2019 a half-point better on the day at just under 60 bid.

At another desk, the 7.67% notes due 2016 of Dynegy Danskammer, a subsidiary that operates a coal-fired power plant in upstate New York, were quoted up 1½ points at 55 bid.

Bondholders were recently roiled by the transfer of some assets within the company. Critics said the assets were transferred in such a way that they would not be available to the bondholders in the event of a restructuring.

Hovnanian heads higher

Another credit seen moving up was Hovnanian Enterprises' 10 5/8% notes due 2016. A trader quoted the Red Bank, N.J.-based homebuilder's bonds a half-point improved at 86½ bid, although a second market source, who also pegged the bonds above the 86 mark, said they were up by 1 5/8 points on the session.

More than $8 million of those bonds traded, putting them fairly high up on the Junkbondland most-actives list for the day.

There was no fresh news on the company, which has been among the hardest-hit names in the homebuilding sector of late amid more gloomy numbers coming out of Washington and such industry trade groups as the National Association of Realtors, which tracks home sales trends.

A Hovnanian sector peer - Irvine, Calif.-based builder Standard Pacific Corp. - was also higher, its 8 3/8% notes due 2021 gaining 1½ points to close at 85½ bid.

But some homebuilder and real estate names were moving in the other direction, such as Los Angeles builder KB Home, whose 6¼% notes due 2015 were seen down a deuce at 85 bid.

Parsippany, N.J.-based Realogy, which provides real estate and relocation services, was also a loser. Its 11½% notes due 2017 fell nearly 1½ points on Tuesday to 74½ bid, on active volume of more than $11.5 million.

A second market source saw the bonds at that same level but called them down 1 5/8 points.

Gymboree gyrates lower

A trader said that he saw Gymboree's 9 1/8% notes due 2018 "under pressure," seeing those bonds off by "a couple of points" to around the 81 bid area.

A market source at another desk saw those bonds going home at 82¼ bid, down 1¾ points on the day.

There was no fresh news out on the San Francisco-based retailer of children's apparel and accessories, although one market participant suggested that the bonds might be in retreat on Friday's news that Moody's Investors Service revised the company's outlook to negative from stable, although it did affirm the company's B2 corporate family rating and its other ratings at present levels.

Moody's said that its negative outlook revision primarily reflects "persistent negative trends in EBITDA over the past few fiscal quarters." The agency cautioned that these negative trends "are unlikely to reverse over the course of the current fiscal year."

Hawker unmoved on downgrade

A market source reported little in the way of dealings in Hawker Beechcraft Acquisition, even after the problem-plagued Wichita, Kan.-based aircraft manufacturer's ratings were cut by Moody's.

The company's 8½% notes due 2015 were being quoted around the same 45 bid level at which they had traded on Monday.

There meantime was no activity seen at all in either its 8 7/8% PIK notes due 2015, which last traded last month around the 45 level, or its 9¾% senior subordinated notes due 2017, which last traded around 38 bid, also last month.

On Tuesday, Moody's lowered the company's rating across the board, cutting its corporate family rating to Caa3 from Caa2.

The agency lowered the company's $182.9 million of 8½% notes and $302.6 million of 8 7/8% PIK notes to Ca from Caa3, while keeping its $145.1 million senior subordinated notes at that same Ca level.

Moody's said that the downgrade reflects Hawker Beechcraft's mounting retained deficit and the agency's view that "the soft economy dims chances for profitability anytime soon."

Kodak coming back?

A trader said that one bond "that people are asking more and more about and you're getting a lot of press on is Kodak," especially the 7¼% notes due 2013.

He noted that "a couple of months ago, they got hit from a high of 98 all the way down to 85 or even 84," when the company wasn't doing well, "and there was a lawsuit and other [negative] stuff."

Fast forward a few months.

Now, he said, "there seems to be some buying in the 87-88 range."

There was no fresh news out on the Rochester, N.Y.-based photographic products company, whose traditionally strong sales of film and the cameras that use it have withered in the Digital Age, but whose portfolio of technology patents is seen as a major asset, as it licenses its decades of scientific discoveries to makers of personal computers, smart phones and other devices.

The trader pointed out that "people are starting to say that with those patents they have, the company may be worth more dead than alive, with what the patents are worth, and that these bonds are going to be paid off."

Fueled by such optimism, he said, "they've been holding up in that range now," despite the recent sell-off.

A second trader mentioned Kodak on Tuesday, noting there had indeed been some buzz about the money the company could make with its patents - but said he had seen no activity in Tuesday's dealings.

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