RadioShack steady ahead of earnings; Alpha Natural, coal continue to rally; broad market firm

By Stephanie N. Rotondo

Phoenix, July 22 - The distressed debt market kicked off the week with a firm tone, traders reported.

Investors were keeping an eye on RadioShack Corp. as the company prepares to release earnings on Tuesday. Over the weekend, it was reported that the struggling retailer had tapped investment firm Peter J. Solomon Co. to raise funds.

"I think people have staked out their bets and are waiting to see [earnings]," a trader said.

Meanwhile, the coal sector continued to gain ground, though on no fresh news. A trader said Alpha Natural Resources Inc. in particular was on the rise during the session.

In distressed emerging market names, Petroleos de Venezuela SA's 8½% notes due 2017 slipped a touch to 93 5/8, while Chilean supermarket operator SMU saw its 7¾% notes due 2020 rising 1½ points to close around 72.

In other recently topical names, Colt Defense LLC's 8¾% notes due 2017 were pegged at 80 1/8.

Overseas Shipholding Group Inc.'s 8 1/8% notes due 2018 meantime continued to be strong, trading at 92, according to a trader.

The trader also saw ATP Oil & Gas Corp.'s 11 7/8% notes due 2015 holding around 11/4.

"The bank debt is still under water pretty bad," he said, pegging that debt around the 50 mark. "It's hard to see how these have any value."

The bankrupt oil producer reported a $163.96 million loss from June operations on Monday.

RadioShack holds pre-earnings

RadioShack is slated to release earnings on Tuesday and a trader said the market was waiting to see how those numbers shook out.

As such, the company's bonds were about unchanged on the day.

The trader said the 6¾% notes doe 2015 were trading around 75, while the 2.5% convertible notes coming due Aug. 1 were "still right around 97."

Another trader said the straight bonds dipped to 74 before going out with a 76 handle, unchanged on the day and up from the day's lows.

Earlier this month, it was reported that the struggling electronics retailer was looking to hire a financial adviser. Many wondered if the search had anything to do with the looming maturity.

But soon after, RadioShack released a statement in which it said its liquidity was fine at $820 million as of the end of the first quarter. The company's chief executive went so far as to say that the company had no need of any financing at this time.

Over the weekend, however, news outlets reported that the company had hired Peter J. Solomon Co. to go shopping for funds.

One trader said Tuesday's earnings release and conference call could signal what is ahead for the company and whether or not the convertible issue will be paid off or not.

Coal running up

A trader said that coal names "continue to rebound."

He saw Alpha Natural Resources' 6% notes due 2019 "up another point" at 901/2.

The trader also saw Arch Coal Inc.'s 7¼% notes due 2021 at 841/2.

Another market source pegged Alpha Natural's 6¼% notes due 2021 at 88¼ bid, up almost a point on the day.

A third trader called the 2019 maturity up over a point at 901/2.

Quicksilver Resources Inc.'s 9 1/8% notes due 2019 were meantime called better at 861/4.

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