JC Penney Bonds: 30 Percent Off

Retailer JC Penney has had a troubled year, with sales down 25 percent and the recent resignation of CEO Ron Johnson after only a year and a half on the job. A telling number for the company is that its bonds are trading at about 70 percent of par value, an indication bond investors feel the company may be headed toward bankruptcy. Another possible reason for the bond discount is the liquidity crunch the company may be facing this year. JC Penney is expected spend about $1 billion this year, about the same amount the company has on its balance sheet in cash and short-term investments.