Sabine Pass active; Blockbuster better, worse; Rite Aid moves up; Sprint sets quarterly call

By Stephanie N. Rotondo

Portland, Ore., April 5 - Distressed debt continued to have a firmer tone, traders reported on Monday.

Sabine Pass LNG debt - the bonds linked to Cheniere Energy Inc. - made the day's most active list, following news last week of the company's recent LNG agreement with J.P. Morgan Chase & Co. However, the bonds, while active, were unchanged on the day.

Traders said Blockbuster Inc.'s bonds were either better, worse or about unchanged during the first trading session of the week. Though there was no news out on Monday regarding the movie rental chain, last week saw a slew of seemingly negative Blockbuster news - including word that investor Carl Icahn had decreased his equity stake.

Elsewhere in the retail arena, Rite Aid Corp.'s debt was seen heading higher.

Sprint Nextel Corp.'s notes finished the day unchanged to better, as the company scheduled its quarterly conference call.

And, Verso Paper Holdings LLC saw its bonds boosted by a rating upgrade. The upgrade reflects recovering market conditions, according to Standard & Poor's.

But despite the overall positive tone of the market, sources said volumes remained weak.

"It was one of the deader days of the year," a trader said. "Volume was super light."

The trader said that with the European markets being closed Monday, plus the New York Mets' opening day game and a higher-valued market - to say nothing of the preceding three-day weekend - resulted in "a recipe for nobody to do anything - which is kind of what happened."

Another trader noted that less than $1 billion of high-yield issues traded, "I think maybe for the first time this year." Along with the aforementioned reasons for the lackluster day, he added a lack of new issues.

"I assume the new issue machine will start again in earnest on Wednesday and we'll be back to where we were," he opined.

Sabine Pass debt active

The Sabine Pass LNG bonds of Cheniere Energy were among the day's most active issues, according to traders.

However, despite the activity the 7½% notes due 2016 ended about unchanged around 91, the traders said. One trader noted that about $15 million of the issue had traded.

That trader also saw the 7¼% notes due 2013 ending around 96, though trading was thin in that issue.

But another trader deemed the 7½% notes up nearly a point at 90 bid, 92 offered.

The action in the debt came after the Houston-based energy company announced last week that it had entered into a multi-year agreement with J.P. Morgan Chase & Co. to "utilize their combined expertise in the global liquefied natural gas market," according to a press release.

The agreement will give J.P. Morgan capacity rights at the Sabine Pass receiving terminal in Louisiana.

Also in the energy sector, Energy Future Holdings Corp.'s 10¼% notes due 2015 closed around 731/4, "up a couple," a trader said.

Blockbuster bonds better or worse

Blockbuster bonds traded up "about a point," a trader said, in somewhat active dealings.

The trader placed the 9% notes due 2012 around 91.

At another desk, a trader echoed that 21 level, deeming it only "fractionally better."

"20 [bid], 22 [offered] has covered them for a week now," he said, adding that about $15 million to $16 million of the paper changed hands.

And, another trader called the debt a point weaker at 20 bid, 22 offered.

Last Wednesday, news outlets reported that billionaire investor Carl Icahn - Blockbuster's largest shareholder - had sold off 13.2 million class A shares, as well as 1.2 million class B shares.

Icahn now holds about 5.1% of Blockbuster's class A stock, down from the 16.9% stake her reported in January. He also still holds 4.36 million of the class B shares.

Also last week, the Dallas-based movie rental chain said Monday that it had received word from the New York Stock Exchange that it was not in compliance with minimum market value requirements.

Rite Aid trades up

Also in the world of retail, Rite Aid's debt traded up with the market.

A trader saw the 9½% notes due 2017 gaining 1½ points to end around 85. Another trader also placed the bonds at that level, calling it "a little bit higher," on $20 million traded.

The second trader also saw the 7½% notes due 2017 around 93½ and the 9 3/8% notes due 2015 at 873/4. He said those issues, like the 9½% notes, were "marginally better."

A third trader pegged the 7½% notes at 93 bid, 94 offered, unchanged on the day.

Rite Aid is a Camp Hill, Pa.-based drugstore chain.

Sprint sets quarterly call

Sprint Nextel saw "almost every one of its issues trade" during Monday's session, according to a trader.

However, the trader noted that most of the trades were "onesies and twosies" and that none of the issues showed "nothing more than a half-point [difference] up or down."

The trader placed the 7 5/8% notes due 2011 at 103 and the 8 3/8% notes due 2012 at 104 3/8, both unchanged.

Another market source saw the 6% notes due 2016 inching up about half a point to 90½ bid.

The Overland Park, Kan.-based wireless telecommunications provider set the date for its conference call to discuss its first quarter results. The call will be held April 28 at 8 a.m. ET. The earnings report will be available on the company's website at 7 a.m. ET.

Verso upgrade helps bonds

Verso Paper Holdings' 11 3/8% notes due 2016 finished the day "up about a point," a trader said at 873/4.

The trader noted that it was hard to tell just how much the bonds were up, as they "haven't traded in so long."

Another trader called the 9 1/8% notes due 2014 a half-point firmer at 97½ bid, 98½ offered.

On Monday, Verso saw its corporate credit rating raised to B from B- by Standard & Poor's. The second-lien notes were also upped to B, while the unsecured debt was lifted to CCC+ from CCC.

The rating agency explained that an improvement in market conditions helped in their upgrade decision.

The outlook is stable.

Verso Paper is a Memphis-based manufacturer of coated freesheet and groundwood paper, and supercalendered paper for the printing and publishing industry.

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