Gymboree debt falls, CFO set to exit; distressed market lower, activity subdued on new issues

By Stephanie N. Rotondo

Phoenix, July 14 – The distressed debt market was softer Monday, even as the equity markets ticked higher.

“The stock market was up, but some of these distressed names were down,” a trader said. “A lot of bid-wanted stuff.”

The trader also noted, “There wasn’t a ton of activity in the netherworld.”

Another trader noted that there were “a few new issues that got priced at the end of the day,” which tends to take away investors’ focus.

Gymboree Corp. was “by far the most active name in distressed land,” a trader said. The bonds were active – and lower – as the company announced that its chief financial officer was exiting the company.

Among other distressed names, NII Holdings Inc.’s 7 5/8% notes due 2018 were called up nearly half a point at 29 3/8 at one desk. However, another trader said the paper was “on the quiet side still,” pegging them with a 29 handle.

Verso Paper Corp.’s 8¾% notes due 2019 were meantime following the day’s overall trend, slipping 1½ points “on a handful of trades” to 50½.

Caesars Entertainment Corp.’s debt was also on the down side, its 10% notes due 2018 falling a tad to 36½ and the 9% notes due 2020 declining almost half a point to 83.

A trader said that Colt Defense LLC’s 8¾% notes due 2017 were “off the lows,” trading up nearly half a point to 82 3/8.

Gymboree’s CFO to exit

Gymboree’s 9 1/8% notes due 2018 dropped as much as 4 points on Monday after the company announced the departure of its CFO.

One trader said the debt was down “almost 3 points” at 63 ½. Another trader called the issue off 3 to 4 points, trading in a 62 to 63 area.

The company’s term loan was also down, falling to 83½ bid, 84½ offered from 85 bid, 86½ offered.

As of July 24, Evan Price, CFO and principal accounting officer, will leave his post in order to “pursue another opportunity,” the company said in a regulatory filing on Monday.

Lynda Gustafson will take over Price’s duties until a permanent replacement is found. Gustafson has worked with the company before and is currently serving as a senior advisor.

Gymboree is a San Francisco-based specialty retailer.

Sara Rosenberg contributed to this article

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