Midday Commentary: Little immediate Penney bond reaction to news of Ackman divestment

By Paul Deckelman

New York, Aug. 27 - J.C. Penney Co. Inc.'s bonds were quiet on Tuesday morning, with not much apparent investor reaction to the news that the troubled retail chain's largest shareholder - hedge fund manager and activist investor Bill Ackman's Pershing Square Capital Management - had decided to cash out of its nearly 18% stake and sell its 39.1 million Penney shares.

Penney's 5.65% notes due 2020 opened at 76 bid, up 1½ points from Monday's closing levels and a point higher than its most recent prior round-lot transaction several days ago, a market source said. But the bonds had come back down to around 75¼ bid by mid-morning on volume of over $2 million.

Only a few odd-lot trades and little price movement were initially seen in some of Penney's other issues like its 7.65% notes due 2016, quoted around 88 bid, and its 6 7/8% notes due 2015, seen around the 91 mark.

Penney's New York Stock Exchange-traded shares were off by 3 cents, or 0.22%, at $13.32 at 10:45 a.m. ET. But volume of over 46 million shares traded was more than three times the norm.

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