Verso, iPayment bonds move up, Toys ‘R’ Us slides; coal sector weakens as GDP numbers released

By Stephanie N. Rotondo

Phoenix, June 25 – Verso Paper Corp. and iPayment Inc. were the big upward movers in the distressed debt market on Wednesday, though there was no fresh news on either name to act as a catalyst.

Verso, however, has been notable of late, given concerns that its merger with NewPage Corp. is in jeopardy. Those fears were furthered on Friday when Moody’s Investors Service downgraded Verso and its debt and called the merger into question.

Moody’s further stated that should the merger fail, Verso might be facing bankruptcy.

Still, the Memphis-based papermaker’s 8¾% notes due 2019 rose nearly 3 points in midweek trading to 43, according to a trader.

As for iPayment’s 10¼% notes due 2018, those were seen up 5 points in active trading at 87½.

As for the day’s downward movers, Toys “R” Us Inc. took that prize, as both of its issues ended the session down 2 points.

One trader pegged the 10 3/8% notes due 2017 at 85. Another market source saw the 7 3/8% notes due 2018 at 77 bid.

There has not been any new news on the Wayne, N.J.-based toy retailer since last week, when the company announced that it had fired its chief financial officer.

Coal names sputter

A trader said that the “coals came off a little bit,” ending a recent run-up.

The trader opined that the slip was due to a larger dip in the U.S.’s gross domestic product than was expected.

“It seems like commodities are tied to that sort of thing,” he said.

Arch Coal Inc.’s 7¼% notes due 2021 fell over a point to 73, the trader said. Both the 9 7/8% notes due 2019 and the 7¼% notes due 2020 were down a point, at 85 1/8 and 74¼, respectively.

The 7% notes due 2019 closed off almost a point at 76.

Alpha Natural Resources Inc.’s 6% notes due 2019 then closed down nearly a deuce at 73½.

The trader then called the remaining Alpha Natural issues down 1 to 1½ points on the day.

Real GDP dropped 2.9% in the first quarter, according to a report released by the Bureau of Economic Analysis on Wednesday. That compared to a previous estimate of -1%.

The first estimate released this year proposed that real GDP was growing marginally.

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