Overseas Shipholding notes rise on recovery speculation; CEDC lifted by restructuring proposal

By Stephanie N. Rotondo

Phoenix, March 4 - New issues were seeing the bulk of the action on Monday, but some distressed issues were moving about due to credit-specific news.

Overseas Shipholding Group Inc., for instance, was "up a bunch," according to one trader, on the back of certain court filings that indicated bondholders might get a better recovery.

Central European Distribution Corp. was also quoted higher, though there was not much trading. The higher quotes were due to news that the company received a restructuring proposal from Roust Trading Ltd.

A trader also noted that Pescanova SA's euro-denominated convertible notes were trading "out of the blue" following news that the European company had begun the process of seeking creditor protections.

The news dropped the convertibles by at least 40 points, the trader said.

Overseas Shipholding gets boost

A trader said Overseas Shipholding Group's 8 1/8% notes due 2018 were "up a bunch" in Monday trading, seeing them climb up to the low-50s from the mid-40s.

Another trader said the issue popped 6 to 7 points, ending with a 52 handle.

That compared to Friday trades around "44-ish."

The gains were due to speculation about larger recoveries for bondholders, based on documents filed with the bankruptcy court late last week, the traders said.

CEDC quoted higher

Russian alcohol distributor Central European Distribution confirmed on Monday that it had received a restructuring proposal from Roust Trading.

Though there wasn't much trading in the bonds, a trader said the debt was quoted in the low-70s, up from a 66-67 context.

The proposal - which is also supported by some holders of the $380 million 9 1/8% notes due 2016 and the €430 million of 8 7/8% notes due 2016 - is being evaluated by the company. No details on the plan were released.

Pescanova sees massive drop

Pontevedra, Spain-based Pescanova saw its convertible notes - €160 million of 8¾% notes due 2019, €180 million of 5 1/8% notes due 2017 and €110 million of 6¾% notes due 2015 - topple Monday as the company announced it had begun the process of seeking creditor protections.

The company - Europe's second-largest fish processor - also said it was delaying the release of its quarterly results in order to factor in asset sales and debt renegotiations.

A trader said the activity and the news was "out of the blue." The convertibles dropped from levels around par to levels in the 40s, he said.

The massive decline came as investors were apparently shocked by the news, given that the company was seen as solid, despite its debt-related issues.

J.C. Penney holds, MF Global drifts

Elsewhere in the distressed arena, a trader said J.C. Penney Co. Inc.'s bonds were "still trading," but that they "seemed for the most part unchanged."

He pegged the 5¾% notes due 2018 at "83-ish" and the 5.65% notes due 2020 at 80½ bid, 81 offered.

Another trader said MF Global Futures Ltd.'s 6¼% notes due 2014 were down, trading around 74.

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