Burlington, Bon-Ton under pressure; Auto sector drives lower; Wimar, Trump bonds traded actively

By Stephanie N. Rotondo

Portland. Ore., Dec. 12 - A looming holiday - sure it's over a week away, but it's out there - and investor cautiousness has made an interesting second week of December, no less so on Wednesday.

The distressed market mimicked the previous session: up in the morning, down later in the day, on light volume.

"People tried to push things up in the morning," a trader said. But as the day wore on, "the market gave back the gains again."

"It certainly didn't feel like the market felt very good at the end of the day," he added.

With the market under pressure, there seemed to be little activity to keep players in their desks. In fact, some market sources said they had spent their day in meetings or, as one source put it, "shaking hands and kissing babies."

"Nobody wants to trade anything," a trader said. "Nobody is taking any risk, nobody wants any risk."

Further, he continued, many are still trying to figure out what the latest interest rate cut means - or, for that matter, doesn't mean.

And, with very little fresh news to act as a catalyst, the junk sector had very little motivation to move in any direction. Even news that the Federal Reserve was working with global banks to help fight off the credit crunch did little to inspire investor confidence.

Like the general market, retailers continue to feel heavy going into the holiday shopping season - perhaps an indicator of investor sentiment regarding holiday sales figures. Both Burlington Coat Factory Warehouse Corp. and Bon-Ton Stores Inc. lost as much as 2 points in their debt during the session.

The automotive sector was the "big loser" yet again, a trader said. Delphi Corp., which has gradually slipped lower over the week, dipped about 2 points, while Dura Automotive Systems Inc.'s senior debt fell as much as 3 points.

It was perhaps the gaming sector that saw a good portion of the activity in trading. A trader said Trump Entertainment Resorts Inc. and Wimar Operating closed off of the day's highs, but on decent volume.

Retailers under pressure

Weaker consumer spending going into the busiest shopping season of the year is sure to hurt already struggling retailers. Anticipated weak sales figures for the fourth quarter are also doing very little to inspire investors.

That sentiment is being reflected in distressed retailers' bonds. A trader said names such as Burlington Coat Factory and Bon-Ton are continuing to feel the pressure.

The trader quoted Burlington's 11 1/8% notes due 2014 down 1 to 2 points at 83 bid, 83.5 offered, down from 85 bid, 86 offered. Meanwhile, Bon-Ton's 10¼% notes due 2014 slipped to 79.5 bid, 80 offered from around 81.

At another desk, a trader pegged Linens n'Things floating-rate notes at 56.5 bid, 57.5 offered, down about half a point to a point.

Autos drive lower

A trader dubbed the automotive realm the "big loser" of the day, led by Dura Automotive.

Early in the week, Dura asked a bankruptcy court judge to delay its confirmation hearing - originally slated for Tuesday - in order to give Goldman Sachs and Barclays Capital more time to sell its loans. That sparked a sell-off in the bonds as the market began to see how problematic it was for the company to obtain exit financing in the current marketplace.

Since then, the bonds have steadily declined, and Wednesday was no different. A trader called the 8 5/8% notes due 2012 "weaker" at 19 bid, 20 offered. Another trader, however, saw the bonds fall even more, ending the day at 16.5 bid, 19 offered.

"Somebody is getting jittery," he said.

Still, the trader speculated that the bonds could move up - but only if the sellers clear out.

Another trader placed the senior debt at 15 bid, 20 offered, which "looks lower."

Elsewhere, Delphi debt dipped another 2 points on the day, following the path it has set over the week - despite winning court approval on its reorganization plan.

A trader said the 6.55% notes that were to have matured last year fell 2 points to around 58, while another trader deemed the 6½% notes due 2009 down 1.5 points "or so" to 58 bid, 59 offered.

However, Federal-Mogul Corp.'s bonds managed to close essentially unchanged on the day. A trader quoted the bonds at 74.5 bid, 75.5 offered.

Gaming names active

The gaming industry spun its wheels in Wednesday trading, winning the prize of being one of the more active sectors in the distressed market.

A trader said Wimar's 9 5/8% notes due 2015 traded off their highs of the day around 70, to close at 68.5. Trump Entertainment's 8½% notes due 2015 likewise fell off their highs near 79.5 to end the day at 78.25 bid, 78.5 offered.

Another trader, who said Wimar's debt traded in decent volume, quoted the bonds at 68.5 bid, 69.5 offered.

In "off-the-run" gaming names, the trader noted that Herbst Gaming Inc.'s 8 1/8% notes due 2012 closed at 63.5 bid, 65.5 offered.

Homebuilders mixed

Homebuilders were mixed on the session, following yet another trend established early on in the week.

The market is still waiting to hear news from Technical Olympic USA Inc. A trader said the company was supposed to be sending out financial information to its ad hoc committee this week, but so far, no one is talking.

The trader also noted that there was a "good seller" of the homebuilder's debt. He pegged the 9% notes due 2010 at 42 bid, 44 offered and the 8¼% notes due 2011 at 43 bid, 45 offered. He added that the debt traded into the bid side.

Another trader quoted the 9% notes at 40 bid, 42 offered and its 8¼% notes due 2011 at 44 bid, 46 offered, both up 1 point.

Elsewhere, a trader saw Beazer Homes USA Inc.'s 8 5/8% notes due 2011 at 78 bids, 79 offered and its 6 7/8% notes due 2015 at 72.5 bid, 73.5 offered, about unchanged from Tuesday's levels.

But a market source at another desk pegged its 8 3/8% notes due 2012 just below 80 bid, up nearly 3 points on the day.

Standard Pacific Corp.'s bonds stayed in "the high 60s to the low 70s for most of the day," a trader said, seeing its 7% notes due 2015 "probably a little lower" by 0.5 to 1 point at 67.5 bid, 69 offered.

But another trader saw the company's 9¼% notes due 2012 sliding 5 points to 45 bid, 50 offered.

Another market source saw its 5 1/8% notes due 2009 up 1.5 points at 82.5 - but also said the 9¼% notes fell about 3 points to the 50 level.

WCI Communities Inc.'s bonds "went on a little bit of a ride" Wednesday, a trader said, quoting its 6 5/8% notes due 2015 up 1 point at 51 bid, 53 offered.

"There's always good volume in that name," he said, "and there was good volume today."

Broad market tidbits

Neff Corp.'s 10% notes due 2015 ended the day at 59 bid, 60.5 offered.

Primus Telecommunications Group Inc.'s bonds "seemed stronger," a trader said. He placed the 8% notes due 2014 at 56 bid, 57 offered and the 12¾% notes due 2009 at 94 bid, 96 offered.

Calpine Corp.'s bonds traded sideways, its 8½% notes due 2011 at 113.5 bid, 114 offered.

Tembec Inc.'s 8½% notes due 2011 were down 1 point at 44 bid.

Sea Containers Ltd.'s 10½% notes due 2012 were at 62 bid, 64 offered, "pretty much where they had been. We didn't see a whole lot in that name," a trader said. The company filed for yet another exclusivity extension Wednesday.

Paul Deckelman contributed to this article.

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