RadioShack debt drops as financial adviser sought; Edison Mission paper trades actively

By Stephanie N. Rotondo

Phoenix, July 11 - The distressed debt market was getting a lift on Thursday as the equity markets neared record highs.

Those highs were based on comments made by Federal Reserve chairman Ben Bernanke, who indicated he was not going to walk away from a stimulus program without seeing increased improvements in the economy.

"The stock market was crazy," a trader said. "I'd venture that most of the activity was in more beta-high-yield type stuff."

But while the broad market was again posting gains, RadioShack Corp.'s debt was taking a downward turn on reports the company was looking to hire a financial adviser.

The Fort Worth-based electronics retailer has a 2.5% convertible bond coming due in just a few weeks.

Meanwhile, Edison Mission Energy bonds were on the active side, though with no fresh news to act as a catalyst.

RadioShack turns weak

RadioShack is reportedly looking for a financial adviser as it gets closer to an Aug. 1 maturity on its 2.5% convertible notes, of which there is $287 million outstanding.

The news didn't do much to help the bonds, which fell 9 to 10 points to around 90, according to one trader.

The trader saw the 6¾% notes due 2019 hit a low of 69 before they recovered to go out in a 71 to 72 context.

Another market source said the 6¾% notes were gyrating throughout the session, opening higher at 74, dropping to 69 and then rebounding some to 71-72.

Another trader also placed the 6¾% notes in that zip code, which he said was down from 74. As for the convertibles, he saw them in trade down into the low-90s from the high-90s previously.

This isn't the first time RadioShack's future has been cloudy. Just last year, a string of quarterly losses led many to believe the company would soon file for bankruptcy. In September, the company was thrown a rope when it signed a $100 million 11% term loan with Wells Fargo.

Edison Mission mixed

A trader called Edison Mission's debt down a touch at 601/4.

However, another market source called the 7% notes due 2017 up 2½ points at 601/2.

There's been no fresh news out on the bankrupt Rosemead, Calif.-based power producer, a former unit of Edison International Inc. However, last month, the company said it had hired JPMorgan to investigate whether or not a sale of the company would bring in more for shareholders and creditors than the current reorganization plan.

The current plan turns the company over to creditors.

Broad market posts gains

Elsewhere in the distressed space, Exide Technologies Inc.'s 8 5/8% notes due 2018 inched up to 601/2, according to a trader.

The trader also saw AmerenEnergy Generating Co.'s 6.3% notes due 2020 moving up to around 76.

Another trader said Clear Channel Communications Inc.'s LBO bonds - the 10¾% and 11% notes due 2016 - "continue to move higher," putting on another 2 points to trade around 92.

And, OGX Petroleo & Gas Participacoes SA's 8½% notes due 2018 "traded down a few more points" to 18, as a shareholder asked a Brazilian court to block asset sales and payments to the company.

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