Distressed debt loses out to new issues on final trading day of week; J.C. Penney busy, better

By Stephanie N. Rotondo

Phoenix, March 1 - The first day of the new month saw investors focusing on a flurry of new issues that priced late Thursday instead of on distressed bonds.

"It's really been new issues," a trader said. R.R. Donnelly & Sons Co., Charter Communications Inc. and Equinix Inc. were among those that came late in the previous session. For its part, Equinix was said to be dominating overall high-yield trading.

But in the world of distressed names, J.C. Penney Co. Inc. remained active. After two consecutive days of losses, however, the bonds were beginning to rebound.

Eastman Kodak Co. was on the upside as well. The gains came as the company reached an amended financing agreement with second-lien bondholders.

J.C. Penney rebounds

A trader said J.C. Penney bonds were "for the most part, maybe a little bit better," following two straight day's of losses tied to a poor earnings report.

The trader pegged the 5.65% notes due 2020 at 81 bid, 81½ offered and the 7 1/8% notes due 2023 in an 88-89 context.

Another trader saw the 7 1/8% notes "coming off of yesterday's lows," deeming the debt up 3 points to 891/2. However, he saw the 7.95% notes due 2017 slipping a point to 93.

Late Wednesday, the company reported its quarterly results, which showed no improvement despite a massive turnaround effort.

For the fourth quarter, the Plano, Texas-based retailer reported a net loss of $552 million, or $2.51 per share.

That compared to a profit of $294.1 million, or $1.28 per share, the year before.

Excluding one-time charges, net loss was $427 million, or $1.95 per share. Analysts had forecast a loss of 28 cents per share.

Revenues were down 28.4% to $3.8 billion, despite it being a big holiday quarter. Same-store sales declined by 31.7%.

For the year, the company lost $985 million, or $4.49 per share. Revenues declined by 24.8% to $12.99 billion.

Same-store sales were down 25%.

Kodak rises on deal

Rochester, N.Y.-based Kodak - the bankrupt digital imaging company - inked an amended financing plan with second-lien bondholders on Friday.

The news pushed up the second-lien paper, such as the 9¾% notes due 2018. He said the notes hit highs around 80, but settled back in around 79.

Under the new terms of the agreement, Kodak must raise $600 million from asset sales, instead of the original $700 million. The deal is expected to close later in the month.

Kodak also announced that the company and the bondholders had hired a search firm in order to find suitable new board candidates.

Kodak filed for bankruptcy in January 2012. It hopes to file a plan of reorganization by April.

Verso up, Clear Channel down

In other distressed issues, Verso Paper Corp.'s 8¾% notes due 2019 were up a deuce at 411/2, according to a trader.

There was no news out to cause the gain.

Clear Channel Communications Inc.'s 11% notes due 2016 were meantime "continuing to slide," the trader said, seeing the paper down over a point at 741/2.

However, he noted that trading in the issue was thin.

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