Bon-Ton notes push up as store closing sales begin; Mallinckrodt issues finish week higher

By James McCandless

San Antonio, Feb. 16 – A quiet day capped off a disappointedly quiet week, traders said, as investors remained skittish to make forays into the distressed debt market.

Notes in Bon-Ton Stores, Inc. ended the week higher. The company began offering large discounts the stores that it expects to close. It also announced appointments to its unsecured creditors committee.

Mallinckrodt plc issues ended the week by shaving off a portion of the gains made over the past several days after announcing Tuesday that it had completed its acquisition of Sucampo Pharmaceuticals.

A rally in oil futures this week led to mixed results in distressed oil and gas names. Noble Energy, Inc., Northern Oil and Gas, Inc. and Sanchez Energy Corp. were notable end-of-week movers.

Frontier Communications Corp. and Intelsat SA closed the week as favorites in the distressed telecom space yet again. A week of speculation about a potential buyer for parts of Hexion, Inc. has kept its paper in the limelight.

Bon-Ton trades up

After filing for bankruptcy early last week, notes in York, Pa.-based department store chain Bon-Ton Stores rallied Friday, traders confirmed. The company announced that it had begun the process of closing 42 stores by offering heavy discounts on merchandise, according to reports. It also announced the appointment of its official 7-member committee of unsecured creditors (see related story elsewhere in this issue).

The 8% notes due 2021 rose 1½ point to close at 18½ bid.

Mallinckrodt ends active week

Issues in Britain-based drug maker Mallinckrodt ended on a fourth day of high volume trading, market sources confirmed. The company announced on Tuesday that it had completed the $1.2 billion acquisition of Rockville, Md.-based biopharmaceutical name Sucampo Pharmaceuticals.

The 4¾% issues due 2023 fell slightly to close at 80 bid.

Oil names trade

A week of fluctuating oil futures led to bumps in activity for several distressed energy names, a trader said.

Despite jumping on Thursday, Houston-based independent oil and gas producer Noble Energy bonds remained active to close Friday. The company announced yesterday that it would be repurchasing $750 million worth of shares and selling its deepwater Gulf of Mexico assets for $710 million.

The 6.2% bonds due 2040 held at about 68½ bid. The 5¼% bonds due 2042 rose about 1½ point to close near 68¼ bid. The 8.7% bonds due 2045 jumped 1½ point to close at 84¾ bid.

Minnetonka, Minn.-based oil and gas name Northern Oil and Gas notes have continued their high volume of recent weeks after recently announcing plans for a note exchange, raising new equity, and changes in management.

The 8% notes due 2020 fell about 1¼ point to close just below 86 bid.

Houston-based oil and gas company Sanchez Energy saw its 6 1/8% issues due 2023 drop about ¼ point to close at 77½ bid.

Volume favorites active

Distressed telecom names filled out a slow day to close the week. Norwalk, Conn.-based wireline telecom Frontier Communications’ most active paper were mixed at the end of Friday, traders said.

The 7 5/8% paper due 2024 dropped ¾ point to close at 62½ bid. The 10½% paper due 2022 shot up 3¼ points to end the week at 87 bid. The 11% paper due 2025 fell 1 point to close at 76¼ bid.

Luxembourg-based satellite communications company Intelsat’s 5½% notes due 2023 traded up 1¼ point to close at 80¾ bid. The Intelsat Jackson SA 7¼% notes due 2020 rose ¾ point to end at 89¼ bid.

A week after rumors started spreading that a sell off was forthcoming for parts of Columbus, Ohio-based chemical producer Hexion by sponsor Apollo Global Management has kept its notes in heavy volume.

The 9% notes due 2020 dropped ¼ point to close at 82 bid. The 6 5/8% notes due 2020 rose again by more than ½ point to close at 95 1/8 bid.

“It’s been frustrating with people holding their money in ETFs for the last few weeks,” a trader said. “Not a lot of people are willing to buy right now. If the equity markets hold steady for another week, then we’ll probably see some more activity. But for now it’s quiet.”

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