Market action muted amid poor weather; Momentive Performance bonds lower; J.C. Penney edges up

By Stephanie N. Rotondo

Phoenix, Feb. 13 - Distressed debt activity was muted Thursday, due mostly to desks emptying early ahead of inclement weather in the Northeast.

"We didn't have too many players in today," one trader said.

Another trader opined that the upcoming three-day weekend combined with the poor weather conditions resulted in more people opting to stay home - or get out of Dodge.

Despite there being fewer players around, Momentive Performance Materials Inc.'s bonds weren't saved from dropping during Thursday trading. On Tuesday, Standard & Poor's put out a report on the chemical manufacturer stating that the company would not likely avoid a default or debt restructuring in 2014.

However, J.C. Penney Co. Inc. paper was not all that active on news the company had hired a new chief financial officer. Though trading was overly heavy in the name, a trader said the bonds did tick up a bit.

Away from those names, Caesars Entertainment Corp.'s 10% notes due 2018 were holding in around 49 7/8, while the 12¾% notes due 2018 inched up to 58.

Walter Energy Inc. meantime reversed course, rising over 2 points to 711/2, according to a trader.

Momentive default likely: S&P

Momentive Performance Materials might be facing a default or debt restructuring in 2014, at least according to a report put out by S&P late Tuesday.

Come Thursday, a trader said the company's bonds were off as much as 3 points on the day.

The 9% notes due 2021, he said, lost 2½ points, closing at 901/2. The 11½% notes due 2016 dropped 3 points to 69.

In its report, S&P dropped Momentive's credit rating to CCC- and gave it a negative outlook. The agency noted that free cash flow has been negative for nine quarters. In the third quarter alone, the company burned through $80 million.

Momentive has about $3.3 billion of outstanding debt.

"Prospects for sufficient improvement to stave off a payment default or debt restructuring within the first three quarters of 2014 are dim," wrote S&P analysts Cynthia Werneth and Paul Kurias. "We expect the company to continue to generate negative free operating cash flow, causing liquidity to dwindle."

Momentive is based in Albany, N.Y.

J.C. Penney taps new CFO

J.C. Penney hired a new CFO, the company announced Thursday.

On the news, a trader saw the Plano, Texas-based retailer's 7.4% notes due 2037 rising half a point to 67.

Ed Record will take over the post currently held by Ken Hannah. Hannah is slated to step down next month after taking the job in May 2012.

The management change comes as the company continues to turn itself around. In early 2013, Ron Johnson was ousted as chief executive officer. Johnson, a former Apple executive, was brought in to replace Mike Ullman as the company aimed to revitalize its image.

But Johnson's strategy failed to produce results and he was given the heave-ho and replaced with his predecessor.

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