Distressed bonds recover to end week; Toys ‘R’ Us holiday sales, bonds rise; steel mixed

By Stephanie N. Rotondo

Seattle, Jan. 8 – Distressed debt finished the week higher, though the broader markets lost their early gains by the end of the day.

The course reversal came after China’s market’s showed improvement following two trading-day halts this week. Also steadying the markets – at least on the domestic side – was word that nonfarm payrolls added 292,000 jobs in December. Additionally, October and November jobs figures were revised to add another 50,000 jobs for those months.

Holiday sales figures were also starting to come out. Among distressed retailers, Toys “R” Us Inc. managed to post improved sales for the period.

As a result, the retailer’s bonds had “a pretty big rally,” a trader said.

Meanwhile, market sources gave mixed reviews of the steel sector in Friday trading, with some reporting that the space was weaker and others seeing an upward trend. There was news out of China early in the day about how the Asian nation intended to cut steel production due to global oversupply of the commodity.

But while the day was mostly positive, there remained spots of weakness.

A trader said Navios Maritime Partners LP’s 8 1/8% notes due 2019 fell a deuce to 41 7/8.

“They have been under some pressure,” the trader said. “So have some of the other shippers.”

There was no news, however, to cause the decline.

Toys’ sales rise

Toys “R” Us released its holiday sales results on Friday, showing a 2% gain in combined core sales for November and December.

The news gave the company’s debt a boost, according to traders.

One trader said the 7 3/8% notes due 2018 closed at 57½.

“Oh boy, that’s up 10 points,” he said.

“I know they were more active,” another trader said of the name. He added that “depending on the flavor, they were up anywhere from 6 to 10 points.”

He saw the 7 3/8% notes rallying to 57, while the 10 3/8% notes due 2017 jumped to 79 from 73.

Another market source pegged the 7 3/8% notes at 55¼ bid, up over 7 points.

For the nine-week period ending Jan. 2, the Wayne, N.J.-based toy retailer said domestic same-store sales improved 1.4%. Internationally, core sales jumped 3.1%.

The company noted that the rise in combined core sales was due to strong online sales and growth in Canada and Japan.

Elsewhere in the retail arena, a trader said the Gymboree Corp.’s 9 1/8% notes due 2018 closed at 26½, unchanged day over day.

Steel ends mixed

It was a mixed bag day for steel producers on Friday.

At one desk, a trader said AK Steel Holdings Corp.’s 7 5/8% notes due 2021 fell a point to 35. Another trader echoed that level, stating that the paper was “trending a little bit lower.”

But at another desk, a market source saw U.S. Steel Corp.’s 7% notes due 2018 rising over 2 points to 70¼ bid, while ArcelorMittal’s 6½% notes due 2021 improved over a point to 76½ bid.

Domestic steel producers have struggled as commodity prices have slumped due to a supply glut. That supply glut was due in part to heavy production in China.

But on Friday, it was reported that China’s largest steel-making province, Hebei, intended to cut production by 8 million metric tons this year.

Iron ore production in the region will also be slashed by about 10 million tons.

© 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.