Distressed trading subdued by snowy New York; Rite Aid active, steady; Clear Channel debt dips

By Stephanie N. Rotondo

Portland, Ore., Jan. 7 - The distressed debt market was "definitely a little more subdued," a trader said Friday, after being more active than expected during the rest of the week.

The week's steady climb upward was also halted on Friday, as traders called the market unchanged to weaker.

"It was the first time all week I saw bids getting hit," a trader said. As the equity markets were also on the soft side, "I just think we're due for a little bit of a pause."

Another trader blamed the lighter volume on the weather, as New York was hit with snow.

"Some people are out or leaving early with the weather," he said.

Still, he said that "for the most part, things felt unchanged."

Rite Aid Corp. debt performed in line with the day's trend. Traders deemed the bonds steady to lower in active trading.

Clear Channel Communications Inc. meantime continued to be active, but sources saw the company's debt declining after gaining ground in the previous session. One market source opined that the dip was due to profit taking.

Elsewhere, the Great Atlantic & Pacific Tea Co. Inc.'s bonds were seen holding their ground, as they have been for a while now. Though the debt is down from its recent highs in the high-90s, a trader remarked that the bonds remain well up from their pre-bankruptcy woes.

Rite Aid active, mixed

Rite Aid's 9½% notes due 2017 were on the active side Friday, with traders calling the paper down a touch to essentially unchanged.

The bonds were pegged around 85½ by several sources.

Earlier in the week, the Camp Hill, Pa.-based drugstore chain released its December sales report, which showed a 0.6% gain in same-store sales year over year.

Analysts polled by Thomson Reuters had expected a 1% decline. The improvement marked the first gain since May 2009.

Total sales came to $2.08 billion, a 0.5% decline from the year before. About 63% of revenues came from prescription sales.

Clear Channel gives back

Clear Channel Communications continued to be an actively traded credit, though traders saw the bonds giving back some of the gains incurred on Thursday.

A trader quoted the 11% notes due 2016 at 89½ bid, 89¾ offered, "probably a little lower." The 10¾% notes due 2016 were also weaker at 91 bid, 91½ offered.

Another trader said about "$20-odd million" of the 11% notes changed hands, trading around 89. He deemed that level down "a point and change" on the day.

The 10 ¾% notes meantime dipped 2 points, he said, to end around 89.

"They did run [up] a bunch," he said. "Lots of it traded and the bias was down so it might have been just cleaning up of some profits."

There hasn't been any fresh news out on the San Antonio-based multimedia company.

A&P 'just sitting there'

The Great Atlantic & Pacific Tea Co.'s 11 3/8% notes due 2015 were seen unchanged on the day, but one trader noted that the bonds are still well up from the lows hit before the company officially filed for Chapter 11 protections.

He pegged the issue at 91 bid, 92 offered.

"They are just sitting there," he said.

At another shop, a trader quoted the notes at 92 bid, 93 offered, also unchanged.

The company's 5 1/8% convertible notes coming due in June and its 6¾% converts due 2012 were still in the same 33-34 context they've recently held, on "not much activity," a trader said, "just quotes." He saw the bankrupt supermarket company's 11 3/8% senior secured notes also stationary around 92 bid, 93 offered and continuing to trade flat.

The Montvale, N.J.-based operator of the A&P supermarkets - among others - filed for bankruptcy last month. But it is not the only grocer having troubles.

Supervalu Inc. - not yet a distressed credit, though time will tell whether or not it will become one - said Friday it was closing 20 underperforming stores. The Eden Prairie, Minn.-based company operates Albertson's branded stores, among others.

According to one trader, Supervalu debt dipped 3 or more points during the session, seeing the 7¼% notes due 2014 falling to 96 and the 8% notes slipping to 941/2.

Broad market steady to softer

In the rest of the distressed debt market, Harrah's Entertainment Inc.'s 10% notes due 2018 closed at 903/4, a trader said.

Another trader called NewPage Corp.'s 11 3/8% notes due 2014 unchanged around 96.

Paul Deckelman contributed to this article

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