Toys ‘R’ Us notes spike as bids for Asia business surface; Cobalt issues slide amid asset sale

By James McCandless

San Antonio, April 11 – Traders reported a slightly more active day in the distressed debt market on Wednesday as news led to spikes in activity.

Toys “R” Us, Inc. notes shot up after reports surfaced that the company has received $1 billion in bids for a majority share of its Asia business.

Cobalt International Energy, Inc. issues declined after the company announced that it has sold several of its Gulf of Mexico assets.

Nine West Holdings, Inc. notes were active for a third day but mixed, remaining in high volume after the company declared bankruptcy on Friday.

Frontier Communications Corp. notes were mixed in the distressed telecom space as the company continues searching for buyers for certain assets. Intelsat SA issues declined. Community Health Systems, Inc. issues were mixed. Elsewhere in energy, EP Energy Corp. notes were mixed.

Toys “R” Us gets bids

Wayne, N.J.-based bankrupt toy retailer Toys “R” Us notes saw a spike in volume and traded up Wednesday, traders confirmed, after the company received $1 billion in bids for an 85% stake in its Asia business. The retailer recently declared bankruptcy, announcing that it would cease U.S. and U.K. operations while seeking buyers for its Asian and Canadian business.

“Their Asia arm has been pretty strong,” a trader said. “There’s talk of a potential IPO if a deal can be reached.”

The 8¾% notes due 2021 gained about 4½ points to close at around 12 bid. The 7 3/8% notes due 2018 jumped up about 8 points to close at around 14 bid.

Cobalt slides on asset sale

Houston-based oil exploration company Cobalt saw issues decline slightly after the company announced that it has sold several assets located in the Gulf of Mexico to Total SA for approximately $300 million as approved in bankruptcy court (see related stories elsewhere in this issue).

“Those issues were very active but didn’t go much of anywhere,” a trader said.

The 7¾% notes due 2023 shaved off ¼ point to close at 84 bid.

Nine West mixed

New York City-based shoe store chain Nine West paper was mixed in Wednesday trading, traders confirmed. The paper has been active since the company filed for Chapter 11 bankruptcy on Friday with a potential selloff of certain assets in the works.

“Their Jones notes have become a focal point in recent days,” a trader said. “It’s the latest retailer to go down.”

The Jones Group Inc. 6 7/8% paper due 2019 lost about 1¾ points to close at around 9½ bid. The Jones Apparel Group Inc. 6 1/8% bonds due 2034 rose 1¾ points to close at 18¼ bid.

The 6 7/8% paper gained 2¾ points and the 6 1/8% bonds gained 4½ points Tuesday.

Volume names trade

Norwalk, Conn.-based wireline telecom name Frontier Communications notes, ever popular in the distressed telecom space, were mixed as the company continues its search for a buyer for certain assets.

The 7 5/8% notes due 2024 lost about 2¾ points to close just above 63½ bid. The 10½% notes due 2022 traded up about ½ point to close at 87¾ bid. The 11% notes due 2025 remained level at 77½ bid.

Luxembourg-based satellite communications company Intelsat saw its Intelsat Jackson SA 5½% notes due 2023 fall ¼ point to close at 83 ¼ bid. The 7¼% notes due 2020 lost about ¼ point to close at 95½ bid.

Franklin, Tenn.-based hospital operator Community Health Systems issues were mixed.

The 7 1/8% notes due 2020 trended upwards but remained at around 83¾ bid. The 6 7/8% notes due 2022 fell ¼ point to close at 58 bid.

Another energy name moving was Houston-based oil and gas producer EP Energy Corp., with notes ending the day mixed in trading as oil futures made gains.

The 7¾% notes due 2022 traded down ½ point to close at 63½ bid. The 6 3/8% notes due 2023 rose 1 point to close at 51¼ bid.

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