Distressed debt action stumped amid lack of sellers, too much liquidity; TXU bonds inch higher

By Stephanie N. Rotondo

Phoenix, April 22 - The distressed debt market was getting off to a subdued start on Monday, which traders attributed to several different factors.

One trader noted that the first trading day of the week has been typically quiet recently.

"Mondays have been brutal of late," he said.

Another trader remarked that there were "no sellers, and buyers didn't want to pay up."

On top of that, the second trader said that the housing numbers didn't look too good, although the equity markets seemed to shrug that off, at least. He opined that the reason for that was because of "so much liquidity sloshing around."

Market players might have also been sitting it out Monday to wait for the week's onslaught of earnings to begin.

As for the day's dealings, the energy sector was generally positive overall. Energy Future Holdings Corp.'s Texas Competitive Electric Holdings Co. LLC paper was even seen firming a bit, as the market waited for news of a potential prepackaged bankruptcy plan.

Away from the energy arena, it was mostly the status quo.

AMR Corp.'s debt - such as the 9% notes due 2012 - were holding around 116 as the airline readies to exit bankruptcy.

A trader said J.C. Penney Co. Inc. bonds were "up a smidge," though "not all that active."

He pegged the 5.65% notes due 2020 at 82½ and the 5¾% notes due 2018 at 861/2.

TXU paper firms

Energy Future's Texas Competitive Electric bonds were inching up in Monday trading.

A trader called the 15% notes due 2021 "probably up a little bit" at 26 bid. He called that about half a point stronger.

Another market source pegged the 15% notes at 25½ bid, 26 offered, up from 25 bid, 25½ offered.

The source also saw the 10¼% notes due 2015 rising to 10½ bid, 11 offered from 10 bid, 10½ offered last week.

On April 15, the Dallas-based power producer said in a regulatory filing that it had proposed a prepackaged bankruptcy plan to certain creditors regarding its Texas Competitive unit. Negotiations on the proposal began, but ended without any agreement being inked. Energy Future said in the filing that as it stood, the talks would not be ongoing.

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