Capmark trades actively, better; Bon-Ton jumps on no news; AbitibiBowater keeps posting gains

By Stephanie N. Rotondo

Portland, Ore., April 17 - The distressed bond market continued to gain strength on Friday, traders reported.

"The market seems to be just ripping," said one source. Another noted that volumes, especially for a Friday, were above average.

Capmark Financial Group Inc. made the day's active list, moving up as much as 6 points on the day. As far as news went, the company announced that it would further delay filing its 10-K.

Meanwhile, Bon-Ton Stores Inc.'s bonds jumped huge during the session. However, it was not clear what had pushed the debt higher.

AbitibiBowater Inc.'s bonds remained on the firmer side, as well. The movement in the notes came just one day after the company filed for Chapter 11 protections.

Capmark trades actively, better

Capmark Financial Group's bonds were among the most actively traded, traders reported.

A trader deemed the 5 7/8% notes due 2012 about 2 points better at 23.5, with $34 million trading. Another trader said the floating-rate notes due 2010 got as good as 5 to 6 points better, closing around 40.

The Horsham, Pa.-based company announced Friday that it would need more time to file its annual report. Capmark had originally estimated the 10-K would be filed by April 15, as the company entered negotiations with lenders in an effort to amend its bridge loan and senior credit facility.

"The substantial time and resources that continue to be dedicated to these negotiations by Capmark's management and financial staff, as well as the uncertainty and range of potential outcomes of these negotiations, significantly impedes Capmark's ability to timely file its 10-K without unreasonable effort or expense," the company said in a statement.

Among other financial-related names, First Data Corp.'s 9 7/8% notes due 2015 were also seen ending the week better, though there was no news to explain the recent gains.

A trader called the issue 4 points stronger at 70.5, with about $30 million changing hands. Another said the bonds were "up a good bit" around 70.

Bon-Ton jumps for no reason

Bon-Ton Stores' 10¼% notes due 2014 were seen gaining about 10 points on the day for "no reason," according to one trader.

The trader quoted the bonds at 32 bid, 33 offered and noted that he "didn't see any news" that would have explained the massive jump.

Earlier in the week, the company did file its annual report, but the trader did not think that was the cause of the gains.

"Those numbers were all known," he explained.

On Friday, Bon-Ton said that it would continue working with General Growth Properties Inc., which had filed for bankruptcy on Thursday. Bon-Ton has 10% or more of its stores in shopping malls owned by the real estate investment trust.

GGP's 8% notes due 2009 continued to gain ground, with a trader quoted the notes at 39 bid, 40 offered, up "another couple of points." The bonds are trading flat, or without accrued interest.

Elsewhere in the retailing world, Burlington Coat Factory Warehouse Corp.'s 11 1/8% notes due 2015 closed another 5 points higher at 66, according to a trader.

Some have speculated that the recent gains the retailer has racked up is due to short covering. However, one trader had his doubts about the short-covering scenario, noting that Burlington's term loan is in the high 60s, around 68 bid, 71 offered, which he called "up 20 points on the week."

"There's a lot of that going on in the loans, there seems to be really strong buyers on the loans," the trader said. Although he himself does not trade bank debt, "that caught my eye when it came across."

Abitibi continues to gain

AbitibiBowater's bonds were mostly higher just one day after the papermaker filed for Chapter 11 protections.

A trader saw the 9% notes due 2009, the 6½% notes due 2013, the 9½% notes due 2012 and the 7.95% notes due 2011 all trading in the 10 to 11 range, which was just a tad higher on each issue. However, the 6% notes due 2013 ended unchanged around 4, while the 8 3/8% notes due 2015 slipped 1.5 points to 3.5.

The Montreal-based newsprint maker filed for bankruptcy on Thursday after its creditors rejected a recapitalization plan originally announced earlier in the year.

On Friday, Fitch Ratings downgraded the company to D. Also, the price on the company's credit default swaps was set at 3.25 cents on the dollar at auction.

Broad market mixed

In the wider hemisphere of distressed land, General Motors Corp.'s term loan was quoted weaker on Friday after rallying by about 7 points in the previous day's trading hours, according to a trader.

The term loan was quoted at 56½ bid, 57½ offered, down from around 59 bid, 60 offered on Thursday, the trader said.

The big run up on Thursday had been attributed to news reports that the company is thinking of offering to swap $27.5 billion of bond debt for equity by the end of the month.

On Friday, the focus turned back to Chapter 11, as there was various chatter that bankruptcy is a probably outcome for the troubled Detroit-based automotive company.

Hawker Beechcraft Acquisition Co. LLC's bonds continued to move higher, following the company's stronger-than-expected earnings on Thursday. A trader pegged the 8½% notes due 2015 at 37 bid, a gain of 5.5 points.

Freeport-McMoRan Copper & Gold Inc.'s 8 3/8% notes due 2017 slipped more than a point to 97, a trader said.

A trader said that MGM Mirage's bonds were lower as "[Carl] Icahn tries to force them into bankruptcy." He saw its 9 3/8% notes coming due later this year at a 36-38 context, down from 40-41 before that, "so maybe [the news] is forcing them down a little," estimating the decline as "two to three points" across the board. He saw the 7½% notes due 2016 at 43-44, versus 44-45 previously, "off a little, but not too much."

He also saw the 13% secured notes due 2013, on the other hand, at 84 bid, 86 offered, versus 82-83 on Monday," so they seem a little better. That's weird."

Another trader also saw the 13% notes "a point or two higher," at 87 bid, 89 offered, but said the company's other bonds, like its 6 7/8% notes due 2016, were also "a little higher," at 45 bid, 47 offered, on "some volume, with 45ish-type bids."

Sara Rosenberg and Paul Deckelman contributed to this article.

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