J.C. Penney rallies more as CEO exit chatter deemed false; Travelport heralds refinancing plan

By Stephanie N. Rotondo

Phoenix, March 12 - The distressed debt market was again firm on Tuesday, though a trader noted that high-yield name Chesapeake Energy Corp. was getting most of the attention.

The company is currently in a fight with bondholders who are claiming that a recent call at par is improper and that the notes should instead be called with a premium.

Back in the distressed realm, Travelport LLC was active and higher after the company announced a refinancing negotiated with debtholders. The company also reported earnings that fell in line with expectations.

Meanwhile, J.C. Penney Co. Inc.'s paper continued to rise. Rumors had been circulating that chief executive Ron Johnson was getting ready to leave his post, but news out Tuesday indicated that it was not the case.

Overseas Shipholding Group Inc. bonds also saw a major boost in trading, though there was no fresh news to explain the gain. A trader said the debt was up as much as 9 points on the day.

Travelport notes rises

A trader said Travelport's 9 7/8% notes due 2014 were "up a bunch" as the company announced a refinancing plan.

The trader pegged the issue at par, up from 96 bid, 97 offered.

He also saw the 11 7/8% notes due 2016 rising "a little bit" to around 79.

Another trader deemed the 9 7/8% notes up 3 points at par, while the 11 7/8% notes increased 2½ points to 801/2.

The Atlanta-based travel services provider said that bondholders had agreed to a plan that swap their debt for new 13 7/8% notes due 2016 or floating-rate notes due 2016, plus cash.

The company also reached an agreement with its PIK-loan lenders to swap the debt for equity.

Travelport also reported quarterly results on Tuesday. Though the company more than doubled its loss to $171 million - compared to $84 million the previous year - the results were in line with expectations.

J.C. Penney rally continues

Plano, Texas-based retailer J.C. Penney put the kibosh on rumors that CEO Ron Johnson was getting ready to leave his post, as a turnaround effort spearheaded by him as failed to produce positive results.

The company's bonds have been on the rise recently, following a massive crash after the release of dismal fourth-quarter results in February.

A trader said the 7 1/8% notes due 2023 "keep rallying," seeing the issue end at 98 on Tuesday.

Another trader also placed the debt around 98, calling that up over 2 points.

A third market source pegged the 5.65% notes due 2020 at 79½ bid, up a point.

Bloomberg reported on Tuesday that rumors of Johnson's departure was "false," quoting an email from a company spokesperson.

In its earnings report out last month, J.C. Penney reported a 25% decline in annual revenues, which fell to $13 billion, the lowest level since 1987. Johnson has attempted to change the company's image by turning stores into mini-boutiques and by taking away sales and coupons.

However, customer backlash soon resulted in the reinstitution of sales and other discounts.

Overseas Shipholding bonds pop

Overseas Shipholding Group's 8 1/8% notes due 2018 "popped" on Tuesday, according to a trader.

He called the issue up 8 to 9 points, ending in the low-60s.

Another source saw the notes closing in a 62-63 context, up from levels around 53 on Monday.

However, there was no fresh news out on the New York-based oil tanker company currently operating in bankruptcy.

Distressed market still strong

Among other distressed issues, a trader said Sorenson Communications Inc.'s 10½% notes due 2015 hit a high of 87 bid, 88 offered during the day's session.

The trader also saw Eastman Kodak Co.'s 9¾% second-lien notes due 2018 trading "north of 80," though he said that was "about the same."

Another trader saw NII Capital Corp.'s 7 5/8% notes due 2021 rose a point to 701/2.

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