Alpha Natural mixed on new issue; Sears to review options for unit; J.C. Penney results on tap

By Stephanie N. Rotondo

Phoenix, May 14 - A distressed debt trader said most of Wednesday's activity was centered on new high-yield issues. However, some distressed names were seen trading on the active side.

Alpha Natural Resources Inc. had "pretty good activity," a trader said, following pricing of a new issue late Tuesday. The new issue "didn't really do anything," another trader remarked and the older debt was a mixed bag.

Sears Holdings Corp.'s bonds also saw a surge of action as the company announced it was reviewing strategic options for its Sears Canada stake. The company holds a majority stake in the unit.

With earnings on the way, fellow retailer J.C. Penney Co. Inc. was also notable. A trader noted that the bonds have been climbing up recently, though that wasn't necessarily the case during midweek trading.

Earnings will be released on Thursday.

Alpha Natural active

Alpha Natural Resources' new $500 million of 7½% notes due 2020 never really got off the mat, traders reported Wednesday.

One trader said the new deal closed at par ¼ bid, par ¾ offered. Another trader pegged the notes at par 1/4.

As for the Bristol, Va.-based coal producer's older debt, a trader said the name was "fairly active," though he deemed the bonds "sort of unchanged."

He saw the 6¼% notes due 2021 at "77-ish."

Another market source pegged the paper at 77¾ bid, up a quarter point.

A third source called the 6¼% notes off half a point, however, at 771/2. He also said that 6% notes due 2019 fell slightly to 801/4.

Elsewhere in the mining arena, MolyCorp Inc.'s 10% notes due 2020 were one of the day's bigger losers, as a trader saw the issue dropping 2 points from its last trade a couple days ago to close at 89.

Another trader echoed that level.

Last week, the rare earth metals company reported disappointing earnings. Net loss per share was 29 cents, versus expectations of 21 cents. Revenues fell 18% to $118.5 million, missing estimates of $144.4 million.

MolyCorp said that the loss was due in part to production interruptions at its California facility, from which less material was mined than expected.

Sears reviewing Canadian options

Sears Holdings said early Wednesday that it was considering selling off its majority stake in Sears Canada and that it planned to hire an investment bank to look into its options.

On the news, the company's 6 5/8% notes due 2018 were slightly lower to unchanged in "pretty active trading," according to a trader.

He deemed the debt steady in a 92¾ to 93 context.

But another trader called the issue down a quarter point at 93.

J.C. Penney mixed pre-earnings

Also in the world of retail, J.C. Penney is slated to release earnings on Thursday. Ahead of the numbers, the bonds were rather mixed.

One trader saw the 6 3/8% notes due 2036 falling half a point to 753/4, as the 7.4% notes due 2037 slipped a touch to 76 3/8.

However, the 5¾% notes due 2018 inched up a bit to 853/4, he said.

Another market source called the 5.65% notes due 2020 half a point higher at 81¾ bid.

At another desk, a trader said the bonds have been moving higher of late and called the debt unchanged to slightly higher on the day.

He pegged the 5¾% notes around 86, which he said was up half a point to a point.

As for Claire's Stores Inc., a trader said the name "continues to drift in."

He saw the 7¾% notes due 2020 ending the day at 63 bid, 64 offered.

Another trader called the 8 7/8% notes due 2019 half a point better at 793/4.

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