Sears bonds gain holiday momentum; Springleaf paper active; OPTI unfazed by takeover news

By Stephanie N. Rotondo

Portland, Ore., Nov. 28 - Distressed debt started the week "firm," a trader said Monday, though he noted that "people aren't getting back into the swing just yet."

Sears Holdings Corp. paper was gaining ground, as retailers reported that Black Friday was quite successful. However, one trader remarked that it was hard to say how much of the gains was sector-based and how much was the stock market being up 300 points.

There was no news to act as a catalyst, but another trader noted that Springleaf Finance Corp. - formerly known as American General Finance Corp., a former unit of American International Group Inc. - was on the active side.

"There were a ton of trades for them," he said. The bonds ended the day about unchanged.

Also unchanged were OPTI Canada Inc.'s notes. The debt was practically radio silent on news its Cnooc Ltd. takeover had closed and that the company was looking at redeeming $825 million in first-lien debt.

"That's already a done deal, so you're not going to have any price movement on that," a trader said.

Sears gets a holiday boost

Retailers across the country reported that Black Friday sales - as well as sales throughout the holiday weekend - were good and that helped many struggling credits, such as Hoffman Estates, Ill.-based Sears Holdings, to gain momentum.

One trader said the 6 5/8% notes due 2018 were "up a tad" at 76 bid, 77¾ offered. Another trader placed the issue around the 78 level.

But the second trader opined that the gains were more based on a positively performing market - the Dow Jones industrial average rose nearly 300 points during the session - than on how the overall retail sector was performing.

"I think it's more just the market than a rebound from Black Friday," he said.

Another trader said that Rite Aid Corp. paper was "something that I saw trade a lot," perhaps in reaction to a rise in the Camp Hill, Pa.-based drugstore chain operator's stock, and those of other retailers following reports of strong "Black Friday" sales by leading U.S. retailers.

He said that "a good amount of size" of the 9½% notes due 2017 traded, quoting the bonds at 84½ to 85, which he said was about where the bonds had been last week, or maybe up by a half-point.

A second trader saw those bonds going home at 85½ bid, which he said was up by a half-point on the day - but he said that "at one point, earlier, they got as good as 87, but then they came back in. So they had been dramatically higher earlier."

A market source at another desk saw around $10 million of the bonds trade, making it one of the more active junk issues on the day. He pegged them up a half-point overall on the session, and a full-point in just round-lot trading, at 85 bid.

Rite Aid's 10 3/8% notes due 2016 were little-changed at around the 106 level - although they had been as low as 104½ earlier in the session - with more than $9 million changing hands.

Rite Aid's 8 5/8% notes due 2015 were up a half-point, at just over 91 bid.

Springleaf trades actively

There was no news out to drive activity, but a trader said Springleaf Finance's bonds were trading busily nonetheless.

He said the 6.9% notes due 2017 traded "a ton" between 64 and 67, hitting the low tick after the market closed. While that was down from levels near 69 to 70 in mid-November, he said that was "in line" with where they had been more recently.

The 5 3/8% notes due 2012 also saw "pretty good volume," he said. He saw the notes trading in a range of 91½ to 92, with yields in the 16% area.

"It's usually around 12%," he noted.

The financial services firm is located in Evansville, Ind.

OPTI bonds unmoved

OPTI Canada's debt was unfazed by news that Cnooc had completed its acquisition of the company's second-lien notes and common stock, as well as news that the company was planning to redeem all outstanding first-lien notes.

One trader said that as both transactions were expected, "you're not going to have any price movement."

Another trader placed the 8¼% and 7 7/8% subordinated notes due 2014 at 67¼ and the 9¾% notes due 2013 at 1021/2. He called both issues unchanged.

Cnooc completed its acquisition of the bankrupt oil-sands producer on Monday, according to a press release. The deal was valued at $2.1 billion.

Additionally, the Calgary, Alta.-based company said it was redeeming $825 million of first-lien debt, including the 9% notes due 2012.

The redemption price is 102 plus interest as of Dec. 28.

Caesars up, Dynegy steady

Among other distressed issues, a trader said Caesars Entertainment Corp.'s 10% notes due 2018 "came off the bottom a little bit," seeing the debt close around 621/2.

Another trader also called the paper "a little bit better" at around 62.

The second trader then deemed Dynegy Holdings LLC's 8 3/8% notes due 2016 "about where it has been" at 70 bid, 71 offered.

Paul Deckelman contributed to this story

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