Distressed debt trading subdued as market closes early for holiday; rue21 firm, Sears steady

By Stephanie N. Rotondo

Phoenix, May 23 - The distressed debt market was gearing down Friday ahead of the three-day Memorial Day holiday.

"I can't say there is anything good in the market," one trader said. "Nothing was really all that active."

The bond market closed early on Friday in preparation for the holiday.

Still, rue21 Inc.'s 9% notes due 2020 continued to inch higher following an investor conference call late Thursday.

A trader pegged the issue at 67 bid, up from 66.

The retailer held the conference call after the market closed on Thursday to discuss the company's first quarter numbers. The numbers were not released to the public ahead of time.

Sears Holdings Corp.'s 6 5/8% notes due 2018 were meantime holding at the higher levels seen on Thursday, after that company did release its earnings to the public.

A trader said the notes were hanging around 92, "nothing really moving there."

The bonds had inched up a touch after the Hoffman Estates, Ill.-based retailer reported first-quarter results on Thursday.

For the quarter, the company posted a loss of $402 million, or $3.79 per share. That compared to a loss of $279 million, or $2.63 per share, the year before.

Excluding certain items, loss was $2.24 per share.

Revenues declined 7% to $7.88 billion.

The revenue loss was attributed in part to there being fewer stores open.

Additionally, the company said that it could close more than the 80 stores it plans to shutter this year.

Meanwhile, a trader said RadioShack Corp.'s 6¾% notes due 2019 "keep creeping up," seeing the paper hit a high of 41 on Friday.

The trader deemed that up 1½ points on the day.

The Fort Worth, Texas-based electronics retailer's plan to close about 1,100 stores was recently blasted as lenders refused to waive certain covenants concerning the number of open stores. Though negotiations with lenders are reportedly continuing, the company has said it will instead move forward with a plan to close fewer stores.

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