Sears declines as loan hits obstacle; Toys ‘R’ Us gives up gains; coal sector takes hit

By Stephanie N. Rotondo

Phoenix, Sept. 25 – Distressed bonds were “pretty weak throughout the afternoon, then it just died,” a trader said Thursday.

“The whole market was weaker,” another trader said.

Sears Holdings Corp. dipped on word the company might be having trouble securing participation in a new $400 million loan the company needs to continue to limp along.

The retailer’s 6 5/8% notes due 2018 “cracked 90,” a trader said, seeing the issue close at 89 7/8.

But Sears wasn’t the only retailer taking a dip. Toys ‘R’ Us Inc.’s bonds gave back some of the gains they got on Wednesday when the company announced a new refinancing plan.

A trader said the 10 3/8% notes due 2017 dropped 3 points to 80 and the 7 3/8% notes due 2016, an issue that will be called under the refinancing plan, dipped to par.

The Wayne, N.J.-based company intends to redeem the 2016 paper on Oct. 24 at 101.844 plus accrued interest.

Meanwhile, the price of metallurgical coal hit a new low Thursday, putting pressure on coal companies like Cliffs Natural Resources Inc. and Walter Energy Inc.

Cliffs Natural Resources’ 6¼% notes due 2040 dropped nearly 6 points to 73¾, a trader said, while the 3.95% notes due 2018 lost almost 4 points to 87.

A trader saw Walter Energy’s 9 7/8% notes due 2020 losing over 2 points to close around 28¾.

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