Distressed debt trading volume subdued; Alpha Natural, J.C. Penney hold steady; NII bonds slip

By Stephanie N. Rotondo

Phoenix, May 19 - The distressed debt market experienced modest volume in Monday's session, even though the broader high-yield market - and for that matter, the equities - had a firm tone.

"It was extremely quiet today," said one market source. "Lowest volume in quite some time."

For all of the high-yield space, which includes distressed issues, total trading volume was less than $1 billion.

But sources had no idea what was weighing on the activity level. Some noted that the upcoming Memorial Day holiday could be to blame, while others said it was "just a Monday." Another option could have been that people were out for graduation ceremonies.

In distressed dealings, even the names that did see a slight flutter of action were just treading water.

One trader said that Alpha Natural Resources Inc.'s 6% notes due 2019 were "pretty much unchanged," trading with a 77 handle.

The trader also saw NII Holdings Inc.'s 7 5/8% notes due 2021 in a 28¾ to 29 context, which he said was "maybe a little bit lower."

Another source pegged J.C. Penney Co. Inc.'s 7.95% notes due 2017 at 99, which was unchanged on the day.

All three of those companies were in the news last week. NII Holdings kicked it off when it released dismal earnings on May 12. Alpha Natural then priced a $500 million issue of 7.5% senior secured notes due 2020 on Tuesday.

Proceeds fro that sale will be used to deal with near-term maturities, the company said.

As for J.C. Penney, it reported better-than-expected quarterly results on Thursday after the market closed.

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