Sears notes lower as investors weigh proposed restructuring; Neiman Marcus notes flat

By James McCandless

San Antonio, Sept. 25 – Tuesday trading in the distressed debt market saw more scrutiny placed on retail names.

Sears Holdings Corp.’s notes declined as investors weigh the prospects of a restructuring proposed by CEO Eddie Lampert’s hedge fund, ESL, on Monday.

Neiman Marcus Group, Inc.’s debt issues were flat. On Friday, an investor accused the company of being in default after a recent private transfer of equity in a subsidiary.

In other sectors, California Resources Corp.’s paper improved, Intelsat SA’s notes gained and Frontier Communications Corp.’s issues ended mixed.

Ensco plc’s paper rose in the energy space.

Sears ends lower

Sears’ notes continued to follow a downward trend, traders said.

The 6 5/8% notes due 2018 lost about 4½ points to close at 88½ bid. The 8% notes due 2019 dropped 7 points to close at 27 bid.

On Monday, the 6 5/8% notes lost 1¾ points and the 8% notes fell 1¼ points.

Chief executive officer Lampert announced a two-part plan to address the company’s debt in an SEC filing on Monday. The plan includes options for restructuring its debt, swapping debt for convertible securities, and selling $1.5 billion of its real estate holdings. Lampert advised the board that “immediate action” was needed to address the company’s financial situation.

“To hear that they have that much real estate that they weren’t doing anything about until now is a little surprising,” a trader said. “But at least they look like they’re trying.”

Sears is a Hoffman Estates, Ill-based department store chain.

Neiman Marcus flat

Neiman Marcus, another distressed retailer, saw issues end level on Tuesday, market sources said.

The 7 1/8% notes due 2028 were unchanged at 84 bid.

On Friday, debt investor Marble Ridge claimed that the company was in default over its recent private transfer of equity in its e-commerce segment MyTheresa.

The company disclosed the transfer in its recent earnings release.

Neiman Marcus is a Dallas-based luxury department store chain.

California Resources rises

Meanwhile, California Resources’ paper improved in the energy space, traders said.

The 6% notes due 2024 added ¾ point to close at 87¼ bid. The 8% paper due 2022 picked up 2¾ points to close at 95¾ bid.

On Monday, the 6% paper dropped 1½ points and the 8% paper added 1 point.

Volume names trade

Intelsat’s notes gained in Tuesday trading.

The Intelsat Jackson SA 5½% paper due 2023 rose ½ point to close at 91¾ bid. The Intelsat (Luxembourg) SA 8 1/8% paper due 2023 added about ¾ point to close at 87¼ bid.

Meanwhile, Frontier Communications’ issues were mixed elsewhere in distressed telecom.

The 7 5/8% notes due 2024 added about ½ point to close at 65¼ bid. The 10½% notes due 2022 were level at 89¼ bid. The 11% notes due 2025 lost 1 point to close at 78¼ bid.

In other trading, London-based oil and gas driller Ensco’s bonds improved.

The 5¾% bonds due 2044 picked up ½ point to close at 75 bid.

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