Distressed bonds gain as Yellen comments boost markets; energy sector holds; Toys edges up

By Stephanie N. Rotondo

Phoenix, Feb. 24 – The distressed debt market held up Tuesday, rising with the equity markets as Janet Yellen, the chairman of the Federal Reserve, told a Senate committee that the central bank was looking to be more flexible on its looming interest rate increase.

The Fed will first drop the use of the word “patient,” a term used since December when the agency said it would take its time to raise rates.

Second, the Fed will adopt a “meeting-by-meeting” approach to the rate raise. Some market watchers are speculating that the hike – which was previously expected to occur around June – could be pushed back to October.

Oil prices were also initially higher, but ended slightly weaker. However, distressed energy names held up rather well.

A trader said Toys “R” Us Inc. debt “held its gains from yesterday,” with even the 10 3/8% notes due 2017 managing to trade a “little higher.”

On Monday, the company made a presentation at the JPMorgan Global High Yield and Leveraged Finance Conference in Miami. In the presentation, the Wayne, N.J.-based retailer announced preliminary quarterly results that seemed to please investors, who in turn boosted the company’s bonds.

Meanwhile, Gymboree Corp.’s 9 1/8% notes due 2018 “continued to climb a little,” a trader said, placing the paper at 45.

Another trader said Claire’s Stores Inc.’s 7¾% notes due 2020 improved about 1½ points “from about a week ago,” ending at 37.

© 2015 Prospect News.
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