Ameren Energy debt remains weak post-downgrade; J.C. Penney rises; PMI, Ambac, MF Global firm

By Stephanie N. Rotondo

Phoenix, Jan. 29 - The "general theme" of Tuesday was softer, a distressed debt trader said.

"The go-go's are drifting more," he added.

Ameren Energy Generating Co. continued to lose ground, though overall trading in the name remained thin. The bonds began to lose value on Monday following a rating downgrade from Fitch Ratings.

While the day was on the weak side, some names and sectors were getting a boost.

For instance, J.C. Penney Co. Inc. paper was firming as the company said it intended to reintroduce sales events to its retail model. The company had previously said it would no longer hold sales as it reshaped the way it did business. But consumers were turned off by the idea and the company's sales were not turning around as quickly as hoped.

Ameren declines again

Ameren Energy's 7.95% notes due 2032 were "taking it on the chin," a trader said Tuesday.

The trader saw the bonds falling 4½ points to 581/2. However, he also noted that volume in the name was light.

Another trader said the 7.95% notes, the 7% notes due 2018 and the 6.3% notes due 2020 were "starting to converge on price," seeing the issues trade down to 58 bid, 59 offered from previous levels around 60.

The company's debt began to decline on Monday following a downgrade from Fitch Ratings. Earlier in the month, the company said it was exiting the merchant generating business due to market conditions.

J.C. Penney trends higher

J.C. Penney paper was on the rise as the retailer said it was bringing sales events back into its stores.

A trader called the 5.65% notes due 2020 up nearly a point at 841/4.

Last year, the struggling retailer decided to stop all sales events in lieu of having everyday discounted prices, including a clearance-only section. But consumers weren't excited about the vision and sales failed to pick up.

As such, the company has elected to reintroduce sales events in order to entice customers back. J.C. Penney will also add tags or signage to products in order to show how good of a deal customers are getting.

PMI, Ambac, MF Global rise

Bankrupt financials and insurance names were climbing higher in Tuesday's session, though without any fresh news to drive it.

A trader said PMI Group Inc.'s bonds were "up a little bit" at 32.

The trader also said that Ambac Financial Group Inc.'s debt was "much stronger" at 471/2.

And, MF Global Futures Ltd.'s benchmark 6¼%/7¼% notes due 2016 were "a little stronger" at 68 bid.

Dex One debt unfazed

A trader said there wasn't much action in Dex One Corp.'s debt securities, even as the company's rating view was downgraded to negative from developing by Standard & Poor's.

"They've been loosely quoted around 40," he said, adding that he had not seen any markets during the day's session.

S&P changed its outlook on the phonebook publisher due to the belief that a prepackaged bankruptcy could be looming - an effort they believed would have "sufficient lender support."

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