Petroplus bonds converge; Rite Aid debt rises despite case for bankruptcy; Springleaf tightens

By Stephanie N. Rotondo

Portland, Ore., Jan. 9 - It was a sideways day for distressed bonds, traders reported, and things were slow going.

"It was mostly go-go stuff that traded," a trader remarked.

"There just isn't any selling," another trader said. "There is so much money sloshing around that there isn't an incentive to sell."

Additionally, he noted that "some things are still kind of expensive," discouraging would-be distressed investors looking for value.

Petroplus Holdings AG's bonds "all seem to be converging," a trader said. The debt was trading unchanged to lower, depending upon whom you asked, as investors digested recent news that the European oil refiner had access to its credit lines frozen by lenders, leading to the closure of several refining plants.

Meanwhile, Rite Aid Corp. was "quoted a lot, but there wasn't a lot of trading," according to a trader. The debt was moving up, despite a Seeking Alpha article that laid out why the Camp Hill, Pa.-based drugstore chain was a likely bankruptcy candidate.

Petroplus bonds converge

A trader saw Petroplus Holdings' bonds "converging" on Monday, deeming the debt "kind of unchanged from Friday."

He pegged the 7% notes due 2017 at 38 bid, 42 offered, the 6¾% notes due 2014 at 39 bid, 44 offered, the 9 3/8% notes due 2019 at 37 bid, 42 offered and the 4% convertible notes due 2015 at 37 bid, 39 offered.

Another trader, however, called the bonds "lower on the day," though he added that the bonds had "rebounded some from the bottom."

He also saw the bonds trading in line with one another, placing them in the high-30s across the board.

On Thursday, the Zug, Switzerland-based independent petroleum products refiner and wholesaler said that its lenders had suspended access to all of the credit lines under its revolving credit facilities, and the company announced shutdowns of several of its refining facilities. Paper then fell at least 6 or 7 points.

The company said that it will hold another meeting in the coming days with the lenders in an effort to secure necessary funding and liquidity arrangements to let it meet its current and future financial obligations.

It further said that the talks involve reviewing strategic options and securing other sources of liquidity.

The company additionally announced some facility closures in the wake of the financial problems, including its Petit Couronne refinery in France, its Antwerp facility in Belgium and its Cressier refinery, which is expected to run down crude oil stocks by early in the second half of January.

"They've got two refiners out of five running on partial capacity," a trader said. "They are in rough shape."

Rite Aid quoted higher

Rite Aid was actively quoted, though perhaps not actively traded, a trader said Monday.

He pegged the 9½% notes due 2017 at 95½ bid, 96½ offered, up from 94½ bid, 95½ offered on Friday.

Another market source called the 8 5/8% notes due 2015 up half a point at 97¾ bid.

A third trader "didn't see much" in the way of trading in the name, though he called the 9½% notes "up a little bit" at 96 bid, 96½ offered.

A Seeking Alpha article published Monday indicated that the drugstore chain was a prime candidate for bankruptcy, given its current financial situation.

"Rite Aid is going to have a lot of trouble with raising capital to avoid a bankruptcy," wrote contributor Benjamin Goldman. "The company has only $3.4 billion in inventory, which is small compared to its debt and its brand is virtually worthless.

"There is no part of Rite Aid that should make any investor think there is potential in the future."

Springleaf catches a bid

A trader said Springleaf Finance Corp. "caught a bid" on Monday.

In particular, he saw the 5 3/8% notes due 2012 tightening, pegging the notes at 96 3/8.

"Maybe [investors] think AmGen will be able to retire those bonds," he said.

Another trader said that such a deal was "not out of the realm of possibilities."

Springleaf used to operate under the moniker of American General Finance Corp. and was part of American International Group Inc. In 2010, the Evansville, Ind.-based company was acquired and renamed by Fortress Investment Group managed funds.

NewPage losing ground

NewPage Corp.'s 11 3/8% first-lien notes due 2014 have been slipping of late, according to a trader.

The bonds were "continuing to drop" during Monday's session, the trader said, placing the notes at 65½ bid, 66 offered, "down "a point or so."

Another trader also called the notes lower at 65 bid, 66 offered.

NewPage is a Miamisburg, Ohio-based papermaker currently in bankruptcy.

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