Rite Aid bonds hold on to Friday gains; Dynegy debt closes mixed; OPTI Canada notes unchanged

By Stephanie N. Rotondo

Portland, Ore., May 2 - The distressed debt market "looked like it was going to get hectic" as Monday started, a trader said. However, at the bell, the market "ended where we were.

"There wasn't much that really seemed to do much," the trader said. "It was kind of blasé."

The trader also noted that, for the first half of the day, many were pondering what the reported death of Osama bin Laden would do to the market. As such, "it will be interesting to see what tomorrow brings," the trader said.

Of the day's activity, Rite Aid Corp., which had rallied Friday "for no apparent reason," managed to hold on to those gains, traders reported.

Dynegy Inc. also saw a bit of the action, though there was no news out to drive the credit in either direction, leaving the debt to end mixed on the day.

Rite Aid holding gains

Rite Aid paper "certainly held its gains from last week," a trader said, though he added that there was "not a lot of activity" in the credit.

He said the 9 3/8% notes due 2015 were up "another half a point to a point" at "94 and change." The 8 5/8% notes due 2015, however, were unchanged at 931/2, as were the 9½% notes due 2017 around 93.

Another trader said Rite Aid was "a touch better," the 9 3/8% notes at 93½ bid, 94 offered. But he did remark that the 7.70% notes due 2027 - "a good benchmark issue," he said - were "fractionally down" around 71 3/8.

A third source called the 8 5/8% notes up marginally at 93¾ bid.

The Camp Hill, Pa.-based drugstore chain's debt "rallied Friday for no apparent reason," a trader said. Likewise, there was no news out to help the name hold on to its gains.

Dynegy ends mixed

There was "some trading" in Dynegy debt, according to a trader, though there was no news out on the Houston-based power producer.

The trader deemed the 7¾% notes due 2019 unchanged around 781/2, on "$15-odd million" traded. The 8 3/8% notes due 2016 were meantime up "a solid half to three-quarters" at 871/2.

Another market source saw the 7¾% notes falling half a point to 781/2.

Yet another trader saw the 7¾% notes due 2019 trade in a bid range of 78½ to 783/4, which he called up a point on a "decent amount of volume."

Also in the power patch, a trader said that the Texas utility company formerly known as TXU Corp. "always has something going on" in terms of trading activity, seeing its Energy Future Holdings Corp. 6½% notes due 2024 trading around the 54 bid area and 10 7/8% notes due 2017 in a 94-94½ context. The company's Texas Competitive Electric Holdings Corp. 10¼% notes due 2015 were seen at 64½ bid, with all of the bonds going out around the same levels at which they had opened.

"So they haven't moved much in price," he said. He saw "a small amount of trading" in the 6½% notes and "a moderate amount" of the 101/4s changing hands. However, he declared that there was "no real activity" in the 10 7/8s.

That was in marked contrast to Friday, when the Dallas-based utility and merchant power operator's bonds were among the most actively traded junk issues.

OPTI debt steady

OPTI Canada Inc.'s subordinated issues - the 7 7/8% and 8¼% notes due 2014 - were called unchanged at 53 bid, 53½ offered by a trader.

Another trader saw the 8¼% notes were also trading right around 53. There was "not a lot of trading" in the bonds, "just a few trades today," and he called it pretty much unchanged.

The bonds had gyrated wildly over several sessions last week after OPTI warned that its joint-venture plant will likely be unable to meet the output goal which 35% owner OPTI and its partner, 65% owner Nexen Inc. had previously set.

Paul Deckelman contributed to this article

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