Sprint Nextel bonds defy wider loss; J.C. Penney to redo pricing scheme; Supervalu debt slips

By Stephanie N. Rotondo

Phoenix, July 26 - Distressed bonds were firming up Thursday, after sliding for most of the week.

Sprint Nextel Corp. was the nom du jour as the company released its second-quarter results. Though it posted a wider loss, revenues per user were on the rise. Sprint got another shot in the arm as it stated it was ahead of schedule on its iPhone commitment.

There was meantime "limited trading" in J.C. Penney Co. bonds, a trader said, even as the company announced a new pricing structure to replace a recently launched failed structure.

And, Supervalu Inc. paper was down again, despite having inched up in the previous session.

Sprint up on earnings

Sprint Nextel paper was up about 3 points across the board following the release of the company's second-quarter results, despite showing a wider loss.

A trader said the 6 7/8% notes due 2028 were up over 3 points at 861/4, on about $30 million traded. The 8¾% notes due 2032 increased "almost 4 [points]" to 96 3/8, on $17 million traded.

Another $17 million of the 6.9% notes due 2019 changed hands, gaining 3 points to close around 99 1/8.

Another market source pegged the 6% notes due 2016 at 99½ bid, up 1½ points.

A third source said the bonds were up 3 points "depending on which flavor."

He pegged the 2032 at 96, up from 93.

The Overland Park, Kan.-based wireless telecommunications provider reported a net loss of $1.37 billion, or 46 cents per share. That compared to a loss of $847 million, or 28 cents per share, the year before.

Revenues gained 6.4% to $8.84 billion.

The results were mixed when compared to analysts expectations of a loss of 40 cents per share on revenues of $8.73 billion.

The loss was due in large part to Sprint's Nextel network, which has been losing customers hand over fist. However, the company also said that it had improved customer retention in other areas and that its revenues per user were rising.

Revenue per user increased to $60.88 from $56.67 a year earlier.

Customer churn declined to 1.79% from 2% versus the prior quarter.

Additionally, Sprint said that it was ahead of schedule on its iPhone purchase agreement.

J.C. Penney's new pricing plan

J.C. Penney announced a new pricing structure to replace a recently launched price plan that did not go over well with customers.

The news, however, did little to move the retailer's debt.

"They were not that active," a trader said, calling the paper "pretty much unchanged."

Another trader said the 7.95% notes due 2017 inched up a touch to 961/2, while the 6 7/8% notes due 2015 ended at 981/2.

Beginning Aug. 1, J.C. Penney will turn to a pricing system that includes everyday low prices and clearance prices.

The company will also institute a price-match guarantee.

In January, the Plano, Texas-based company changed its pricing system to a three-tiered structure of regular prices, month-long sales on seasonal items and two "best prices" promotions each month.

Customers did not react favorably to the change, which caused first-quarter sales to drop 20%.

Supervalu slips

After inching up in the previous session, Supervalu debt was again lower on Thursday.

One market source called the 8% notes due 2016 down 1½ points at 84 bid. A second trader said the notes were lower at 83½ bid, 84 offered.

Another trader, however, said the 2016 paper was up slightly at 831/2, though the 8% notes due 2026 slipped a touch to 791/2.

Supervalu is an Eden Prairie, Minn.-based grocery store operator.

Edison loses previous gains

Edison International Inc.'s bonds - which, like Supervalu, had gained in the previous session - were down in Thursday trading as the market prepares for the company's earnings release next week.

The 7% notes due 2017 were down 1½ points at 541/2, according to a trader.

The 7 5/8% notes due 2027 were down 1¼ points at 531/4.

Forbes released an earnings preview on the Rosemead, Calif.-based power producer, which indicated that expectations for the upcoming earnings release were dwindling.

According to the report, analysts are expecting 31 cents per share, down from earlier estimates of 42 cents per share. Revenue expectations, however, are expected to be higher at $3.12 billion.

Broad market firms up

Among other distressed issues, Petroleos de Venezuela SA was yet again a volume leader, according to a trader.

The 8½% notes due 2017 were up nearly a point at 83 3/8, with about $45 million changing hands. The 9% notes due 2021 earned almost 1½ points to close at 741/2, again on about $45 million traded.

The trader also said that Caesars Entertainment Corp.'s 10% notes due 2018 were up a tad at 631/2.

Another trader said Clear Channel Communications Inc.'s 10¾% notes due 2016 "continued to feel a little heavy," as the paper fell in "pretty active" trading to 59½ bid, 60 offered.

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