Bon-Ton paper soars ever higher; Caesars boosted by Nevada gaming revenues; Dynegy debt falls

By Stephanie N. Rotondo

Portland, Ore., March 8 - Distressed debt had "a much better tone today," a trader said at the end of Thursday's session.

Bon-Ton Stores Inc.'s debt continued to soar after reporting earnings on Wednesday. The bonds had risen 4 to 5 points in the previous session and tacked on another 4 points come Thursday trading.

In earnings related news, Nevada's gaming revenue report for January was released and the improved performance helped Caesars Entertainment Corp.'s notes firm.

Dynegy Holdings LLC paper meantime dropped a bit after its parent company, Dynegy Inc., reported a wider fourth-quarter loss.

And, Springleaf Finance Corp. was also going against the grain Thursday, falling about half a point on the day. Earlier in the week, the company had announced office and branch closures, which will affect more than 300 employees.

Bon-Ton bonds pop

Bon-Ton Stores' debt continued to gain momentum Thursday, just one day after the company released earnings.

A trader said the 10¼% notes due 2014 were "better again," quoting the issue at 76 bid, 77 offered.

Another trader said the bonds were up 4 points "on pretty good volume" around 761/2.

A third trader deemed the debt up 4 to 4½ points at 76¾ bid, 77 offered, with about $22 million changing hands.

"The bonds are really up in the last couple days," he said. He added that while the quarterly figures were not great, management's assertions that it would be profitable in 2012 were viewed positively.

The York, Pa.-based retailer said in its earnings release Wednesday that fourth-quarter profit dropped 8.1% due to weaker same-store sales and margins. For the quarter ending Jan. 28, profit was $78.2 million, or $4.00 per share. That compared to $85 million, or $4.41 per share, the year before.

Same-store sales fell 2.6% in the quarter and gross margin declined to 34.6% from 37% previously.

Total sales were $983 million, a 2.7% decrease from the year before.

Bon-Ton also provided 2012 guidance, forecasting earnings of 15 cents to 75 cents per share, with same-store sales gaining 1% to 2%.

On the positive side, the company did buy back $46 million of its bonds and ended February with $453 million of excess borrowing capacity.

Caesars debt gets boost

A trader said Caesars Entertainment's 10% notes due 2018 ended about a point higher around 75.

Another trader called the paper up "a point and change," finishing around 75 3/8, on some $20 million traded.

On Thursday, Nevada's Gaming Control Board released its revenue report for January, which showed an 18.4% increase from the year before.

The gain was attributed in part to Chinese New Year.

Casinos took in $1.04 billion in January, versus $877 million taken in the year before. The total win was the first time the state has hit over $1 billion since September 2008.

On the Las Vegas Strip, revenues improved by over 29%, coming to $624 million compared to $483 million previously.

Caesars is a Las Vegas-based casino and hotel operator.

Dynegy dips on numbers

A trader said Dynegy Holdings' 8 3/8% notes due 2016 were weakening after the company's parent reported full-year and fourth-quarter results.

He pegged the notes at 643/4.

The Houston-based parent of bankrupt Dynegy Holdings reported a net loss of $1.38 billion, or $11.29 per share. That compared to a loss of $164 million, or $1.36 per share, the year before. The wider loss was attributed to a $1.66 billion deconsolidation charge. Lower market prices and outages were also factors.

Revenues declined 47% to $238 million.

Analysts polled by Thomson Reuters were expecting a loss of 16 cents a share on revenue of $573 million.

Springleaf takes a fall

Springleaf Finance - formerly known as American General Finance Corp. - saw its bonds weakening in active trading, a trader reported.

He saw the 6.9% notes due 2017 falling nearly half a point to 78 3/8, with about $20 million of paper changing hands.

"That's a lot of activity for that name," he said.

Earlier in the week, the Evansville, Ind.-based financial services firm said it was immediately shuttering 150 branch offices in 25 states, reducing its workforce by 360 employees.

The closures were done as part of the company's strategic review of operations. The company has reduced its workforce by 690 employees in the first quarter.

The recent layoffs will likely result in a pretax charge of $12.5 million, the company said, due to severance costs and lease termination fees, among other things.

Edison gains again

Edison International Inc. paper remained on an upward course Thursday.

"They had been off," a trader said. "But that stuff came back."

He saw the 7½% notes due 2013 gaining nearly a point, closing at 79¾ bid, 80 offered.

"Not a lot of volume, but definitely better," he said.

Another trader called the 7% notes due 2017 better, seeing the issue trade around 62.

Edison is a Rosemead, Calif.-based power producer.

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