Best Buy's Black Friday excites, but bonds drift; Lehman sells Archstone unit, notes get boost

By Stephanie N. Rotondo

Phoenix, Nov. 26 - Distressed bonds were "kind of firm to unchanged" in Monday trading, a trader said, as prices rose to "pre-Thanksgiving levels."

Still, overall volume was muted, which was blamed on a "thanksgiving hangover."

Best Buy Co. Inc. was deemed "very active" by one trader. The electronics retailer's debt drifted in 2 to 3 points on the day, despite reports that its Black Friday sales were among the most popular in the retail space.

Meanwhile, another trader called Lehman Brothers Holdings Inc.'s bonds the "bond du jour" as the now-defunct investment firm reached a deal to sell its Archstone Enterprise LP unit for $6.5 billion in cash and stock.

Best Buy bonds decline

Best Buy's debt was down on the otherwise firm day, even with reports circulating that its Black Friday sells were positive.

A trader said the 5½% notes due 2021 hit lows near 82, but ended the day at 83. However, that was "still off from pre-holiday" levels around 85 bid, 86 offered.

Another trader said the issue fell 1 to 2 points to 83 bid, 84 offered.

Last week, Best Buy swung to a loss for the third quarter. Net loss for the quarter was $13 million, or 4 cents per share. That compared to a profit of $173 million, or 47 cents per share, the year before.

Sales declined to $10.75 billion from $11.15 billion.

Same-store sales were meantime down 4.3%.

In its conference call to discuss the results, Best Buy's management indicated its belief that the fourth quarter would not be as bad as the third, due in part to its hopes that the holiday shopping season would be a good one.

Management's hopes appeared to prove true, as reports have indicated that Black Friday sales for the company were better than expected.

However, investors might also be wary of such accounts, given that it is only one day of the year.

Lehman gains on Archstone sale

Defunct Lehman Brothers saw its bonds moving up as much as half a point, a trader said, after the company said it was selling its Archstone Enterprise unit for $6.5 billion.

The trader placed the bonds around the 23 mark.

Archstone, an apartment building owner and operator, is Lehman's single largest asset. The investment banking firm had previously owned half of the company, until earlier this year when it purchased the remaining 50% for $1.58 billion.

Equity Residential and AvalonBay Communities Inc. will buy the unit in a deal that will include $2.69 billion in cash, 34.5 million shares of Equity Residential's stock and 14.9 million shares of AvalonBay's stock.

Lehman was liquidated at the beginning of the economic crash in 2008.

Post-holiday strength

In other distressed credits, a trader said Cengage Learning Acquisitions Inc.'s debt continued to gain ground.

He pegged the 10½% notes due 2015 around 30, the 12% notes due 2019 around 40 and the 11½% notes due 2020 around 83.

Another trader said Edison Mission Energy's paper was also on the strong side, trading up to levels around 50.

And, AMR Corp.'s benchmark 6¼% convertible notes due 2014 pushed up to "71-ish."

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