J.C. Penney dips, claims CIT rumors 'untrue'; NII posts wider loss; Affinion rises on earnings

By Stephanie N. Rotondo

Phoenix, Aug. 1 - It was a mixed day for distressed debt as the new month began.

But fresh news - whether it be earnings related or otherwise - was helping to drive names in various directions.

J.C. Penney Co. Inc. stayed in the news as it responded to a New York Post article published late Wednesday that alleged lender CIT Group Inc. had halted some payments to suppliers. The struggling retailer said Thursday that CIT was still making payments as promised and that it had "ample liquidity" to weather whatever came its way.

Investors might not have bought the story, though, as the bonds dropped at least 3 points on the day.

Meanwhile, NII Holdings Inc. reported a wider second-quarter loss and that it had missed a self-imposed deadline to sell some of its towers. Those bonds were down 1 to 2 points by the end of business.

In other earnings news, Affinion Group Inc. posted a narrower quarterly loss, which helped its bonds put on 4 to 8 points during the trading session.

J.C. Penney debt stays soft

J.C. Penney responded Thursday to rumors that its lender CIT Group had stopped making payments to some suppliers.

In a statement released in the early morning, the Plano, Texas-based company said the report - first published in the New York Post late Wednesday - was "untrue" and that it had confirmed the fallacy with CIT directly.

Additionally, the company said it had "ample" liquidity of $1.5 billion.

However, investors didn't seem satisfied with J.C. Penney's claim and the company's debt dropped.

A trader said the 7.4% notes due 2037 and the 6 3/8% notes due 2036 were both off 3 points, at 75 and 73, respectively. The 5.65% notes due 2020 were meantime off 4 points at 77.

Still, he noted that there was thin trading in all of the issues.

Another market source placed the 5.65% notes at 78½ bid, down just 3 points.

A third trader said that the notes "rebounded a few points from the lows, although [they're] still a few points from levels previous to the news."

He also pegged the 2020 paper around 78.

NII notes pressured

NII Holdings' saw its debt decline after the company reported its quarterly results.

One trader saw the 8 7/8% notes due 2019 dropped a deuce to 84 5/8, while the 10% notes due 2016 dipped half a point to 983/4.

The 7 5/8% notes due 2021 lost a point, closing at 791/2.

Another trader said the bonds were "down 1 to 2 points," the 8 7/8% notes at 861/2, the 10% notes at 99½ and the 7 5/8% notes at 791/2.

For the second quarter, NII reported a loss of $384.9 million, or $2.23 per share. That compared to a loss of $85.3 million, or 50 cents per share, the year before.

Revenue declined 11% to $1.26 billion.

The Reston, Va.-based provider of Nextel mobile phone service in Latin America also said that it had missed an Aug. 1 deadline to sell certain wireless towers in order to raise funds for network improvements in Brazil and Mexico.

However, the company said that the deadline was "self-imposed" and that it was continuing to work with interested parties to hammer out a deal.

Wells Fargo & Co. has placed a value of $800 million to $900 million on the potential sale.

Affinion notes leap higher

Affinion Group narrowed its loss for the second quarter and its bonds popped as a result.

A trader called the 11 5/8% notes due 2015 up nearly 7½ points at 58 3/8.

Another trader said the issue traded up to 58 from 50. The second trader also saw the 11½% notes due 2015 at 841/2, which he said was a 4-point gain.

At the end of the second quarter, the Stamford, Conn.-based company had a net loss of $13.6 million, compared to a loss of $62.9 million the year before.

Its parent company, Affinion Group Holdings Inc., posted a net loss of $23.7 million, versus $73 million in the previous year.

Net revenues declined 11% to $336.1 million.

Affinion is an affinity marketing firm.

Market shows signs of strength

Elsewhere in the distressed space, Colt Defense LLC's 8¾% notes due 2017 were seen up 1½ points at 78 by one trader.

Another trader called the issue up a deuce at 781/2.

Exide Technologies Inc.'s 8 5/8% notes due 2018 were also up, gaining 1½ points to close around 61.

RadioShack Corp. was also on the rise, as the 6¾% notes due 2019 ended the day around 71.

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