Eastman Kodak files for bankruptcy, bonds trading flat and mixed; Sears pops on loans from CIT

By Stephanie N. Rotondo

Portland, Ore., Jan. 19 - The distressed debt market was "strong like the bull," a trader said Thursday.

"There was good volume," he added. "Busy day."

Another trader agreed that the overall tone was firm, noting that there were "definitely people putting money to work."

At a third desk, a trader said the "massive land grab" continued.

"Anything that was able to be bought was bought," he said.

Eastman Kodak Co. was the "bond du jour," according to one trader, as the company announced that it had filed for bankruptcy. The bonds began trading flat on the news, but the structure was mixed at the end of the day.

Meanwhile, Sears Holdings Corp. paper "got a pop" on news that CIT Group Inc. was approving financing for the retailer's vendors as soon as Thursday. The lender had previously frozen such loans.

Not al credits needed news to push them higher, however. Sprint Nextel Corp. was on the rise, as was Caesars Entertainment Corp., despite a lack of a catalyst.

Kodak files, bonds mixed

Eastman Kodak announced Thursday that it had filed for Chapter 11 protections in order to reorganize its business.

The filing answered the question that has been plaguing investors for months: Will they or won't they?

On the news, the bonds began to trade flat, or without accrued interest. Still, paper finished the session mixed.

One trader called the 7¼% notes due 2013 down a point at 291/2. However, both the 9¾% notes due 2018 and the 10 5/8% notes due 2019 "looked higher," he said. "Interesting."

The 9¾% notes were up 5 to 6 points, the trader said, at 86 bid, 87 offered. The 10 5/8% notes were also quoted at 86 bid, 87 offered, up 6 or 7 points.

At another desk, a trader placed the 7¼% notes at 29½ and the "second-lien stuff" at 89 bid, 90 offered, which he called "up a few points."

The Rochester, N.Y.-based photo imaging technology company said it was filing for bankruptcy in an effort to "bolster liquidity in the U.S. and abroad, monetize non-strategic intellectual property, fairly resolve legacy liabilities and enable the company to focus on its most valuable business lines."

Citigroup has provided a $950 million 18-month debtor-in-possession facility "to enhance liquidity and working capital," Kodak said in a statement. "The company believes it has sufficient liquidity to operate its business during chapter 11 and to continue the flow of goods and services to its customers in the ordinary course."

Though the indication that the company has "sufficient liquidity" to operate while in bankruptcy, Dave Novosel, a senior analyst with Gimme Credit LLC, thought such a statement "calls into question why the company needed to draw on its revolver back in the fall.

"We may learn more next week as Kodak is scheduled to release fourth quarter earnings," he said in an intraday comment posted on the firm website.

News of the filing also resulted in a downgrade from Moody's Investors Service, which placed the company at D, down from Caa3. Standard & Poor's also changed Kodak's rating, to D from CCC-.

Sears boosted by CIT news

A trader said Sears Holdings' 6 5/8% notes due 2018 were active again and better on word that CIT Group was again providing financing to the retailer's vendors.

He called the notes up "almost 3 [points]" at 831/2.

Another trader said the bonds "got a bit of a pop," quoting the issue at 83 bid, 83½ offered.

"That helped," he said of the CIT news.

Last week, it was reported that CIT was halting such loans to vendors. Though the lender has agreed to provide financing, it is also looking for more detailed information about Sears' finances and may require letters of credit for any and all orders.

Rumors have been circulating recently that the company's chairman, Eddie Lampert, is considering taking the company private. Last month, the struggling Hoffman Estates, Ill.-based retailer said it intended to shutter 120 underperforming stores in an effort to bolster its balance sheet.

Sprint, Caesars gain momentum

Sprint Nextel paper was gaining ground, though on no fresh news to act as catalyst.

A trader saw the 6.9% notes due 2019 gaining 1½ points to close around 85, while the 6% notes due 2016 improved by a point, ending around 87 5/8.

Another market source placed the latter issue at 87¾ bid, up 1¼ points on the day.

Also firming on no news were Caesars entertainment's 10% notes due 2018. The first trader called the debt up 2 points at 79, while the second source pegged the paper at 73 bid, up 2¼ points.

Broad market moves higher

Among other distressed issues, a trader said NewPage Corp.'s 11 3/8% notes due 2014 "rallied" to 67½ bid, 68 offered.

The trader also said that Lehman Brothers Holdings Inc.'s debt was "very well bid," still in the 27 area.

MF Global Holdings Ltd.'s debt - which tends to trade in line with one another - was up about half a point around 38, the trader added.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.