Swift puts it in park; Portola debt continues to gain; Charter bonds better; Retailers end firmer

By Stephanie N. Rotondo

Portland, Ore., April 18 - The distressed bond sector continued to firm on Friday following a rally in the equity market.

"Everything is fine," a trader said. "The whole market was a-running today."

Market players called the overall marketplace at least a half point better on the day.

"The market was definitely firm," said another source. "I would say a good half point, if not more."

After getting "hammered" in the previous session, Swift Transportation Co. Inc.'s debt ended unchanged to lower, though the trading volume was not as much as on Thursday. It was still unclear what had prompted the move, but some sources speculated there were industry-wide concerns worrying investors.

Meanwhile, Portola Packaging Inc.'s bonds continue to edge up, despite the "disappointing" numbers the company posted earlier in the week. One trader said the company's bonds were 5 points better over the week, up another point on the day.

Charter Communications Inc.'s stock has not fared well lately, but its bonds are steadily moving upward. The cable provider received a letter of non-compliance from Nasdaq Stock Market recently, as its equity has traded under $1 for the last 30 business days. But the company's corporate debt gained as much as 3 points during Friday's session.

The retail sector was also seen firmer overall. While Blockbuster Inc. and Linens n'Things Inc. were not seen "overly active," their debt gained about a point. Burlington Coat Factory Warehouse Corp.'s bonds also traded up as the company held its quarterly conference call.

Swift's bonds put it in park

Speculation of trouble in the industry might have been what caused Swift Transportation's bonds to fall in the previous session. But whatever the catalyst, the company's debt bucked the market's trend to close unchanged, if not lower.

One trader, who noted that the 12½% notes due 2017 "got hammered" in the previous session, said the bonds maintained their 39 bid, 40 offered level on Friday.

Another trader called the name Thursday's "big disappointment" but also called the notes unchanged at 39.5.

But another source quoted the bonds one point lower at 38.5 bid, 39 offered on Friday.

On Thursday, one market source opined that perhaps investors were concerned about whether a May 15 coupon payment would get paid or not. Still others wondered if there was industry news that might have caused the decline.

But it is no secret that the trucking sector has fallen on hard times, like many other sectors. Rising oil and gas prices - crude oil hit $116 a barrel while the national average for gas prices topped $3.50 a gallon Friday - has played a large role, as has weakened consumer spending. As consumers tighten their belts, retailers are holding less inventory - giving transportation firms less to cart around.

Swift Transportation is a Phoenix-based transportation provider.

Portola continues to rise

Despite what one trader called "disappointing" numbers reported earlier in the week, Portola Packaging has seen its debt gain as much as 5 points over the week.

One trader said the 8¼% notes due 2012 inched up another point during the last trading day of the week to close at 56.5 bid, 57.5 offered. Yet another source quoted the bonds at 57 bid, 58 offered, up from the previous session's closing price of 55.25.

On Monday, Portola posted a 4.6% increase in sales for the second quarter at $66.6 million. However, the company's net loss widened to $5.1 million, compared to a net loss of $3.3 million the same quarter in 2007. The company attributed the lower numbers to lower gross margins, which were impacted by higher resin costs, among other things.

Still, on Thursday, one source told Prospect News that while the numbers were weaker, "we still like them."

Another trader said the gains in the debt could be attributed to short covering.

"The lower the dollar price, the more the volatility," he said. "I think this is just a reflection of short covering."

Portola Packaging is a Batavia, Ill.-based manufacturer, marketer and designer of plastic packaging components for the cosmetic, fragrance and toiletries markets.

Charter gains

Charter Communications' paper also fared better during the firmer session, despite news that the company received a noncompliance letter from Nasdaq.

A trader deemed the 11% notes due 2015 a point better at 76.5, while the company's newer 10 7/8% notes gained half a point to end at 105.5.

At another desk, a trader saw the 8¾% notes due 2013 at 91.5. He noted that just two days ago, the bonds were closer to 90. The trader also saw the 11% notes at 76 bid, 77 offered versus levels around 74.5 in the previous session.

Charter received a letter from Nasdaq, which stated that the company's class A common stock was not in compliance, as it has traded below $1 for 30 consecutive business days. Charter can regain compliance if its stock trades at or above the $1 mark for 10 consecutive days by Oct. 13. The equity will continue to trade on the market for the time being.

Charter has scheduled its quarterly conference call for 9 a.m. ET on May 12. The company will release its first-quarter results at 8 a.m. ET that day.

Charter Communications is a St. Louis-based cable television provider.

Retailers firmer

After a surge in trading activity on Monday, Blockbuster's 9% notes due 2012 died down over the week. But a trader said that, as the overall market turned upward, so did the movie rental chain's debt, which closed around 83.

Linens n'Things floating-rate notes due 2014 also crept up, ending the day at 42 bid.

Burlington Coat Factory held its quarterly conference call to discuss its financials Friday. The company's financial results, reported earlier in the week, were considered to be decent, despite an almost 6% decline in comparable same-store sales.

A trader said the discount retailer's 11 1/8% notes due 2014 edged higher to 82.5.

Among other names in the sector, Claire's Stores Inc.'s 9 5/8% notes due 2015 gained a couple points to close at around 61, while its 10½% notes due 2017 were likewise better at 52.5.

Dole loan edges up

Dole Food Co. Inc.'s term loan B was stronger in trading following an upgrade by Standard & Poor's of the company's senior unsecured debt and the removal of both the senior unsecured and secured debt issue ratings from CreditWatch, with negative implications, according to a trader.

The term loan B was quoted at 93 bid, 94 offered, up from previous levels of 92 bid, 93 offered, the trader said.

"It's up a point on the upgrade but it's up probably 3 points since they announced earnings. On April 8 it was 88-89," the trader added.

On Friday, S&P upgraded Dole's senior unsecured rating B- from CCC+ and affirmed the secured loan rating at B+.

Dole is a Westlake Village, Calif.-based producer and marketer of fresh fruit, fresh vegetables and fresh-cut flowers.

Broad market mostly stronger

Delphi Corp.'s bonds remained unchanged at around 35, a trader said.

Residential Capital LLC's 6 3/8% notes due 2010 were seen 3 points higher at around 60.

Six Flags Inc.'s 9 5/8% notes due 2014 and 9¾% notes due 2013 were quoted 1 to 2 points better at 60 bid, 61 offered, while the 8 7/8% notes due 2010 were 3 to 4 points firmer in the mid-70s.

A trader called Realogy Corp.'s 12 3/8% notes due 2015 "quite active" at 54.5 bid, 55.5 offered versus levels around 52.5 in the previous session.

Neff Corp.'s 10% notes due 2015 closed 1 point better at 49 bid, 50 offered.

Sara Rosenberg contributed to this article.

© 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.