Sears bonds rise, Bon-Ton weakens; Petroplus, lenders ink deal, bonds get lift; Edison slides

By Stephanie N. Rotondo

Portland, Ore., Jan. 11 - Distressed bonds ended "flattish," a trader said Wednesday.

Sears Holdings Corp. "traded a lot," the trader said, as the bonds were up on no news. Bon-Ton Stores Inc., however, was a bit weaker following a downgrade from Moody's Investors Service.

But the big news of the day was word that Petroplus Holdings AG had reached an agreement with its lenders, allowing it to continue operations. The oil refiner's debt shot up about 3 points on the news.

Meanwhile, Edison International Inc. was on the busier side, but lower. There was no fresh news out to explain the losses.

Residential Capital LLC was meantime inching upward. On Tuesday, investors such as John Paulson and David Tepper urged the mortgage lender's parent, Ally Financial Inc., to continue to prop up the money-losing unit.

Sears higher, Bon-Ton worse

A trader said Sears' 6 5/8% notes due 2018 were "better," placing the issue around 80.

Another trader also pegged the notes around the 80 mark, deeming that up a deuce on the day.

"They traded a lot," he said.

There was no fresh news out, however, on the Hoffman Estates, Ill.-based retailer.

Elsewhere in the retail space, Bon-Ton Stores' 10¼% notes due 2014 slipped about half a point to 60, according to a trader. He noted that the issue was "not too active."

Moody's downgraded the York, Pa.-based retailer to Caa1 from B3 on Wednesday, citing the company's continued negative trends.

Standard & Poor's cut its rating on Bon-Ton to B- from B on Tuesday.

Petroplus, lenders ink deal

Petroplus Holdings' debt got a boost after the company said it had reached a deal with its lenders that would allow it to continue operating.

One trader said the bonds were "up a bunch," trading around plus/minus 50, "depending on the issue."

Another source saw the notes climbing up 2 to 3 points, the 6¾% notes due 2014 at 52 bid, 55 offered, the 7% notes due 2017 and 9 3/8% notes due 2019 at 48 bid, 51 offered and the 4% convertible notes due 2015 at 44 bid, 47 offered.

The Zug, Switzerland-based oil refiner said Wednesday that it had inked a temporary agreement with the lenders of its revolving credit facility that would "provide the financial resources necessary to meet critical expenses, to maintain safe ongoing operations at the Coryton and Ingolstadt refineries, and to allow the company and its lenders to negotiate an amendment to the [credit facility], which is expected to be completed in the second half of January 2012."

Additionally, the company is in talks with a third party to supply crude and feedstock for its Coryton and Ingolstadt refineries.

The company's debt was hammered earlier in the week on news that access to its credit lines had been frozen. That resulted in the shuttering of three of its five refineries.

Edison paper powers down

A trader said Edison International's 7% notes due 2017 were sliding Wednesday, though there was no news out to explain the move.

He saw the notes falling 2½ points to end around 61.

Another trader also called the debt down a couple points at the 61 level.

Edison International is a Santa Ana, Calif.-based power company.

ResCap moving upward

Residantial Capital's bonds were faring "a little better," according to a trader.

He pegged the 9 5/8% notes due 2015 around 78.

Another trader also saw the 9 5/8% notes at 78, calling that up a point. The 6½% notes due 2013 were unchanged around 67.

ResCap was in the news Tuesday as investors such as John Paulson and David Tepper urged the financial services company to continue backing its Residential Capital mortgage lending unit. Its parent company Ally Financial is reportedly in talks with the Treasury Department about what to do with the money-losing unit.

ResCap bondholders holding $800 million of debt - which includes Paulson's Paulson & Co. and Tepper's Appaloosa Management LP - are currently seeking full repayment of the debt.

OverseasShip sails up

A trader said that Overseas Shipholding Group Inc.'s 8 1/8% notes due 2018 gained 2 to 3 points on the session, going out at 63 bid, 65 offered.

He was not aware of any news about the New York-based oil tanker operator, but noted that its shares jumped nearly 10 points on the New York Stock Exchange, gaining $1.07 to close at $12.68.

Earlier in the week, Wells Fargo - citing valuation and tanker supply growth concerns - downgraded the shares to "market perform" from "outperform" and lowered its target range for shares to $10-$12 from $17-$19.

Broad market sees strength

Also in the distressed debt arena, Caesars Entertainment Corp.'s 10% notes due 2018 fell half a point to end around 60, according to a trader.

Another trader said that Washington Mutual Inc. paper was trading actively as investors prepare for the defunct thrift's plan of reorganization to be confirmed. He saw the 4% notes due 2009 trading at 110 and the 4.2% notes due 2010 at 111.

Lehman Brothers Holdings Inc.'s paper was also "well bid for," the trader said. He said the firm's bonds were "stronger," trading around 27.

And, the trader said that Tribune Co.'s bonds were up 3 to 4 points across the board, trading around 44.

"They were all one-sided trades," he said. "Somebody sold them out of their inventory, it looks like."

Paul Deckelman contributed to this article

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