Dynegy paper seen active on better Blackstone bid buzz; Blockbuster, Rite Aid stay busy

By Paul Deckelman

New York, Sept. 27 - Trading in established high-yield bonds in general, and especially in distressed-market issues, was seen taking a backseat on Monday to aftermarket dealings in last week's heavy new-issue junk calendar, as well as the lone domestic deal pricing Monday, for chemical manufacturer Vertellus Specilties Inc.

Nonetheless, traders did see some activity in some of Junkbondland's more underperforming companies on Monday. One such name was Dynegy, Inc., whose bonds traded around as the Houston-based power generating company's stock rose, helped by market speculation that the Blackstone Group - which last month agreed to a $4.76 billion buyout of Dynegy - might raise the price it is offering for the company, as evidenced by the shares' rise above the announced $4.50 per share price.

Traders also saw a fair amount of volume in Blockbuster Inc.'s bonds, which have rebounded from the lows they initially hit after Thursday's not unexpected announcement of the Dallas-based movie-rental company's entry into Chapter 11.

And they said there was good activity in Rite Aid Corp. paper, which is trading above the lows hit last week when the drugstore chain operator reported disappointing second-quarter results.

Higher levels were meantime seen for Catalyst Paper Corp. and Sorenson Communications Inc. bonds.

Traders in the bank debt market, on the other hand, saw little or no activity in distressed-name loan paper.

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