J.C. Penney bonds climb again day after tender offer; Kodak plan filed, second-lien stubs rise

By Stephanie N. Rotondo

Phoenix, May 1 - Distressed bonds were taking a backseat to the primary high-yield issue market on Wednesday, as investors instead were focusing particularly on a two-tranche deal from Constellation Brands Inc.

A trader said nearly $200 million of the new bonds changed hands, with both issues rising above par.

Back in the distressed space, J.C. Penney Co. Inc.'s 7 1/8% notes due 2023 continued to be active, just one day after the company announced a tender offer for the debt.

Eastman Kodak Co. was also busy following the company's official filing of its reorganization plans. The so-called "stubs" - the leftover pieces of the second-lien debt - jumped 10 points on the news.

J.C. Penney's gains continue

A trader said J.C. Penney's 7 1/8% notes due 2023 were "up another couple points" on Wednesday, trading at 1463/4.

Another trader said the debt "continued to be active," trading in a 146 to 147 context.

On Tuesday, J.C. Penney announced the tender offer and consent solicitation to amend certain parts of the indenture. The proposed amendments would allow for a new $1.75 billion loan from Goldman Sachs to be inked ahead of the tender expiration, as the bonds' indenture provides that no other debt may be stacked on top of it.

Under the terms of the tender, holders who participate will receive $1,350 for each $1,000 of notes tendered. The amount includes a $50 consent payment.

However, with the bonds currently trading well above that amount, there are concerns that the company won't get enough participation, which would result in an attempt to defease the debt.

The Plano, Texas-based retailer was making headlines again at midweek on the back of a new ad the company released. In it, the company admits that its turnaround effort was less than successful and urges customers to return, stating that they will find the same brands and prices they had previously known and loved.

Kodak up as plan filed

Bankrupt imaging company Kodak filed its plan of reorganization on Wednesday, which helped its "stubs" gain ground.

One trader said the stubs jumped to par from previous levels around 90. That was echoed by another trader, who deemed the leftover debt up "another 10 points."

As for the unsecured debt, the first trader said the notes were "initially quoted down," though they ended at 20 bid, 21 offered.

"That's pretty much unchanged to maybe down a half [point]," he said.

The second trader also pegged the unsecured paper around 21.

Under the terms of the reorganization plan, second-lien noteholders will receive 85% of new equity upon the emergence from bankruptcy. Other unsecured creditors, including the company's U.S. retirees, will receive the remaining 15% of equity.

Current equity holders will see their securities canceled.

The Rochester, N.Y. hopes to exit bankruptcy in the third quarter, pending court approval of the plan.

Clear Channel strengthens

Clear Channel Communications Inc.'s bonds remained firm, according to a trader.

He called the 10¾% and 11% notes due 2016 "up another half-point or so," the former at 87 and the latter at 88.

Another trader called the 5½% notes due 2016 up 2½ points at 75.

There was no fresh news out on the San Antonio-based multimedia company.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.