Kmart's bank debt traded out of retail with a $7 million auction at 68 last week as investors are more certain that company subsidiaries, which guarantee the bank debt, have sound value. The pricing on the name has fluctuated weekly since the company filed for bankruptcy in January. The name fell as low as 53 in mid-February and rose as high as 70-71 two weeks later.
In the beginning of March, Lehman Brothers had been rumored to be compiling a report on the retail chain's subsidiaries to shed light on the value of guarantees on the parent company's debt. A bank spokesman denied knowledge of such research. (LMW, 3/4). Traders said that no such report has surfaced. Jack Ferry, spokesman at Kmart, did not return calls by press time.