Leap is over for Leap Wireless loans; Levi up on Docker's buzz; Winn-Dixie off

By Paul Deckelman and Sara Rosenberg

New York, April 29 - The jump has finally gone out of Leap Wireless International Inc.'s step as its bank debt for the first time this week backed down about a point from its highs in reaction to the equity markets being off.

Elsewhere, Levi Strauss & Co. bonds were being quoted higher, apparently on renewed market speculation that the San Francisco-based blue jeans maker may sell its popular Docker's line of khaki pants - even though the company says it is not considering such a move.

Winn-Dixie Stores Inc.'s bonds were seen lower ahead of Friday's scheduled release of quarterly earnings data by the troubled Jacksonville, Fla.-based supermarket operator.

San Diego-based telecom operator Leap's bank debt was quoted at 107.5 bid, 108.5 offered, down from Wednesday's levels of 108.5 bid, 109.5 offered, according to a trader.

Prior to Thursday, the paper's performance could be described as nothing short of stellar, as it started Monday morning at 98.5 bid, moved to 101.5 bid by Monday's close, bounced to 105.75 bid, 106.75 offered by Tuesday's close and leapt to 108.5 bid, 109.5 offered by Wednesday's close.

As has been recently reported, the paper has been rallying because people believe there is good equity value behind the name. The company filed for Chapter 11 protection about a year ago.

Furthermore, based on this belief, there has been a surge of technical pressure pushing the bank debt higher, as equity-type players who were not previously getting involved in the paper when it was quoted below par are now buying into it.

Previously it had been unclear as to why this past Monday brought this sudden rash of activity and strengthen to Leap Wireless; however, one source may have found the explanation, saying that they heard "private side information came out on Monday which included valuation work and information on the spectrum."

However, distressed junk bond investors apparently failed to see whatever value is hidden in the company; a market source quoted the Leap zero-coupon notes due 2010 at 13 bid and its 12% notes, also due 2010, at 16, both unchanged on the session, and, in fact, unchanged from the levels they've held for a while.

Winn-Dixie slips

Elsewhere, Winn-Dixie Stores' bonds were seen lower Thursday, on apparent investor worries about the latest results, due out Friday.

The company's 8 7/8% notes dropped to an offered level of 91, with no bid, from 92.5 bid, 94.5 offered on Wednesday.

Levi Strauss rises

Levi Strauss bonds were being quoted around the highest levels they've been in a while, with its 11 5/8% notes due 2008 seen up more than three points on the session at 91.5 bid and its 7% notes due 2006 likewise a big gainer, moving up to 87 bid from prior levels at 84.75.

A source meanwhile said that Levi's 12¼% notes due 2012 were unchanged at levels around 90 bid - but he noted that those bonds had firmed smartly during Wednesday's session.

Published reports said that the bonds were being pushed up by a renewal of market scuttlebutt that Levis might sell Docker's - although Levi says it has no plans to do so.

Some analysts have also expressed skepticism about such talk, noting that with Docker's, Levi has a valuable hedge against sudden shifts in fashion that might make its core blue jeans product less desired, since khaki clothing frequently does well when denim is out of style.

A trader was equally skeptical, noting that if there is anything to such a story, "there's not going to be much upside, because it looks like all of this is already priced in."

He quoted the Levi 7% at 85 bid, 87 offered, the 11 5/8s at 90 bid, 92 offered, and the 12¼% notes at 89 bid, 91 offered, all up solidly in recent days.

RCN steady

RCN Corp. bonds - which on Wednesday had jumped about five or six points on the session, on investor optimism that a consensual Chapter 11 restructuring which will leave bondholders and other creditors in control of the company is coming soon - was seen little changed in Thursday's dealings, the Princeton, N.J. -based telecommunications and broadband operator's 11 1/8% notes due 2007 and 10% notes due 2007 both holding steady at that higher 52 bid area.

Exide gains

Another Princeton company - Exide Technologies, already pretty much through the Chapter 11 process - was higher, its 10% notes due 2005 half a point better at 20 bid.

Mississippi Chemical's 7¼% notes due 2017 were quoted by a market observer as having moved as high as 51.5 bid in morning dealings, "but later it kind of corrected itself," the bankrupt Jackson, Miss.-based chemical producer's notes dropping back to 50.5 bid, still up from prior levels around 48-49.

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