Sorenson notes take ride; Bon-Ton rating lifted, bonds steady; General Growth holds its ground

By Stephanie N. Rotondo

Portland, Ore., May 4 - In sympathy with a declining equity market, the distressed debt market ended Tuesday's session on a softer note.

"Obviously the stock market had everyone's attention," a trader said, as the Dow Jones Industrial Average lost upwards of 200 points. "Probably will [also be the focus] certainly to start the day [Wednesday]."

Still, there was "decent volume," he added, even if "stuff was definitely weaker."

Sorenson Communications Inc. - one of the "names du jour," as one trader put it - saw its debt continuing to ebb. The bonds hit lows in the high-40s before coming back to the mid- to high-50s, still down from levels in the mid-60s on Monday.

In the retail space, Bon-Ton Stores Inc.'s paper was mostly steady, even as the company received a rating upgrade from Moody's Investors Service.

And General Growth Properties Inc.'s notes were also seen holding their ground. The company said it had postponed a court hearing that was to be held Wednesday, as it was still engaged in negotiations with investors who are trying to take the company over.

Sorenson notes take a ride

Sorenson Communications' bonds continued to lose ground during Tuesday's session, adding to the losses incurred on Monday.

A trader said the 10½% notes due 2015 "traded a bunch." At one point, "someone got a real gift," as the bonds hit a low around 491/2. However, the debt managed to come up from those lows to end around 56 bid, 57 offered, he said, which was still down from the previous day.

He added that "probably $25 million" of the non-TRACEable notes changed hands.

Another trader said the bonds were on "a pretty good rollercoaster ride," also seeing them drop into the low-50s, high-40s, only to come back to close at 57 bid, 59 offered.

On Monday, the bonds had fallen into the mid-60s range from levels in the high-90s on Friday. The losses came as investors mulled a potential rate cut that could be adopted by the Federal Communications Commission. If adopted, the regulation would cut rates for video relay services reimbursement by up to 40%.

The first trader speculated that investors were deciding how to react to the pending regulations, thus resulting in the rollercoaster.

"What the FCC says it wants to do is usually less painful then what it will do, because it is a negotiation," he said. Once the FCC makes its final call, "my guess is [the bonds] will migrate back into the high-70s, low-80s."

The news had also put pressure on Sorenson's first-lien term loan. However, sources saw the bank debt recouping some of its losses during Tuesday trading.

The term loan was quoted at 89 bid, 91 offered, up from 86 bid at the close on Monday, the trader said. During the day on Monday, the debt had at one point dropped to the low-80s. On Friday, the loan was quoted at 98½ bid, 99½ offered.

Sorenson Communications is a Salt Lake City-based provider of industry-leading communications services and products.

Bon-Ton bonds steady

Bon-Ton Stores' debt received a rating upgrade on Tuesday. Though the bonds traded in good size - one trader estimated about $20 million of the 10¼% notes due 2014 changed hands - they ended "kind of right where it has been, maybe a touch softer," the trader said.

The trader pegged the issue around the 102 mark.

Another trader said there was "some trading going on" in the credit, quoting the notes at 101½ bid, 102 offered.

"There wasn't that much change in price," he said.

Moody's Investors Service upped Bon-Ton's corporate family and probability of default rating to B3 from Caa1. The bonds were also upgraded, to Caa1 from Caa2.

The lifting of the ratings from typical distressed levels "primarily reflects improvement in Bon-Ton's credit metrics and Moody's expectations that these improvements will be sustained over the near to intermediate term," the agency said in a statement.

The York, Pa.-based retailer has seen improved earnings over the last year, due in part to its internal attempts to manage costs, as well as a slowly recovering economy.

Moody's also noted that the company's $675 million secured asset backed credit facility could provide funding for seasonal needs and that there are "no material debt maturities" until the facility expires in June 2013.

Elsewhere in the retail space, a trader said Rite Aid Corp.'s 7.70% notes due 2027 lost 3 to 4 points to close around 63.

At another desk, a trader saw Blockbuster Inc.'s 9% notes due 2012 falling "a point or so" to levels around 22.

General Growth holds its ground

General Growth Properties' notes finally saw some action, as the company once again postponed a confirmation hearing on its reorganization plan.

A trader said the 5 3/8% notes due 2013 were "one of the few that's kind of hung in there" in an otherwise depressed marketplace. He pegged the paper around 108, calling that "spot on to where it has been," with "$20-odd million" trading.

The Chicago-based shopping mall operator has found itself in the middle of a love triangle, of sorts, as Canada's Brookfield Asset Management Inc. and Simon Property Group have fought over who gets to have the company post-bankruptcy. On Monday, General Growth submitted a revised plan backed by Brookfield, as the company attempts to keep Simon at bay.

However, the company said the reason for the hearing's postponement to Friday from Wednesday was that it was in negotiations with its other potential suitors.

Broad market ends softer

In the rest of distressed-debt-land, Harrah's Entertainment Inc.'s 10% notes due 2018 traded "down a couple points" to around 86.

Another trader saw General Motors Corp.'s benchmark 8 3/8% notes due 2033 falling a point to around 37.

In the financials, a trader said Washington Mutual Inc.'s holding company paper, such as the 5.55% notes due 2010, was "definitely lower by close to 2 points," at 47 bid, 47½ offered.

CIT Group Inc.'s 7% notes due 2017 meantime traded off to around 94, compared to 95 bid, 95½ offered previously.

Sara Rosenberg contributed to this article

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.