Toys ‘R’ Us seeks bankruptcy, bonds trade up; oil and gas bonds better; telecom pressured

By Stephanie N. Rotondo

Seattle, Sept. 19 – Toys ‘R’ Us Inc. was “probably the more notable name” in the distressed debt market on Tuesday, a trader reported.

The Wayne, N.J.-based toy retail chain’s bonds were gyrating throughout the day on news the company had officially filed for bankruptcy. The market has been waiting for such a filing for several weeks, ever since it was learned that Kirkland & Ellis had been retained as restructuring advisers.

Though the bonds have rapidly declined since then, there was a bit of a pop in Tuesday trading. However, a trader noted that at least part of the gain was due to the fact that the bonds are now trading flat, or without accrued interest.

In oil and gas, most issuers saw their bonds improving despite modest weakness in crude oil prices.

Denbury Resources Inc., for instance, saw its 5½% notes due 2022 rising 1¼ points to close at 50, according to one trader, who also saw California Resources Corp.’s 8% second-lien notes due 2022 ticking up almost half a point to 58 7/8.

In EP Energy Corp. paper, the trader pegged the 8% notes due 2025 at 72¾, up three-quarters of a point.

The telecommunications arena continued to lose ground.

At one desk, a trader said Frontier Communications Corp.’s 10½% notes due 2022 came in half a point to finish at 84¾, while Windstream Holdings Inc.’s 7¾% notes due 2020 declined almost 2 points to 82¾.

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