J.C. Penney bonds mixed one day after earnings; Clear Channel debt dips; AMR hitting new highs

By Stephanie N. Rotondo

Phoenix, Aug. 21 - Distressed bonds were on the softer side yet again on Wednesday, despite getting a bit of a boost on Tuesday.

Activity also remained muted.

"There's still a lot of people out on vacations and stuff," a trader said.

J.C. Penney Co. Inc. debt continued to be on the active side, just one day after the company released disappointing results for the second quarter. The securities ended the day in mixed fashion.

Meanwhile, Clear Channel Communications Inc.'s paper was seen slipping, though on no fresh news to act as a catalyst.

But AMR Corp.'s benchmark notes were gaining ground. A trader said there was no news, but opined that investors were "reevaluating" the bankrupt airline's situation.

In other news, Eastman Kodak Co. received approval on its plan of reorganization on Tuesday. The company expects to exit bankruptcy in early September.

Market sources are saying that the bonds will be taken out around that time as well.

J.C. Penney ends mixed

J.C. Penney's bonds were mixed in midweek trading, just one day after the company reported a significantly wider quarterly loss.

A trader said the 5.65% notes due 2020 were up a touch at 741/2, as the 7.95% notes due 2017 rose 1¾ points to 871/4. The 6 3/8% notes due 2036, however, fell over a point to end around 69.

Another market source said the 5.65% notes were off 1½ points at 74 bid.

On Tuesday, J.C. Penney reported a loss of $586 million, or $2.66 per share. That compared to a loss of $147 million, or 67 cents per share, the year before.

Same-store sales declined by 12% and revenues fell to $2.66 billion from $3.02 billion.

The company said sales remained weak due to ongoing store renovations and "disappointing re-merchandising of its home departments."

At the end of the quarter, liquidity was $1.5 billion in cash, including a $2.1 billion loan it inked with Goldman Sachs during the quarter. The company said it is hoping to close out the year with that much in its coffers.

J.C. Penney is a Plano, Texas-based retailer.

Clear Channel slips

A trader said Clear Channel Communications' 7 5/8% notes due 2020 and 6½% notes due 2022 were off about half point on the day.

The 2020 paper closed around par, while the 2022 issue ended around 993/4, he said.

Another trader said the 6½% notes were a bit weaker "just below par." He deemed the 10¾% LBO notes due 2016 "about unchanged" at 861/2.

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

AMR hits new highs

AMR's benchmark 6¼% convertible notes due 2014 hit highs around 96 during Wednesday's session, according to a trader.

He called that up 2 to 3 points.

Another trader said the issue was up 1½ points, trading in a 95 to 96 context.

There was no news out on the Forth Worth, Texas-based bankrupt airline, though the first trader opined that "maybe people are reevaluating their situation."

Earlier this month, the Justice Department filed an anti-trust lawsuit against the company and US Airways, its intended merger partner once it exits bankruptcy. That news caused AMR's bonds to decline massively as the market pondered how the company would exit Chapter 11 protections - and stand on its own - without the help of US Airways.

After the lawsuit was filed, the bankruptcy judge overseeing the case declined to approve a plan of reorganization, as it centered around the planned merger.

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