General Motors, Ford slide lower; Lear shrugs off downgrade; Neiman dips; LCDX, cash weaken

By Sara Rosenberg

New York, Jan. 13 - General Motors Corp. and Ford Motor Co. both saw their term loan levels come in during Tuesday's session with the rest of the market, although the drop in these autos names was a little bit more significant than other names in general.

Also in trading, Lear Corp.'s term loan held firm despite a ratings downgrade, Neiman Marcus Group Inc.'s term loan was noticeably softer, and LCDX 10 and cash were lower, while stocks were relatively unchanged.

General Motors, Ford under pressure

General Motors and Ford were both trading weaker during market hours as the market in general felt heavier, according to traders.

General Motors' term loan was quoted by one trader at 47 bid, 52 offered and by another trader at 47 bid, 50 offered, down two points on the day.

Ford's term loan was quoted by both traders at 38 bid, 40 offered, down 1½ points on the day.

"General market was weak today. I don't think anything specific to autos, but they keep burning through cash like nobody's business and in that space, no new news is bad news and there hasn't been any new news," one trader remarked.

General Motors is a Detroit-based automaker. Ford is a Dearborn, Mich.-based automotive company.

Lear steady with downgrade

Lear's term loan seemed unfazed by a downgrade by Standard & Poor's on Tuesday as levels on the debt held pretty firm, according to a trader.

The term loan was quoted at 49 bid, 53 offered, unchanged on the day, the trader said.

S&P cut Lear's corporate credit rating to B- from B and left the rating on CreditWatch with negative implications.

The rating agency said that the downgrade reflects the view that declining auto sales and production in North America and Europe during 2009 will lower Lear's profitability and cash flow generation and strain liquidity.

"Although Lear has strong positions in the auto seating market and has been expanding outside North America, its customer concentration is with automakers that are lowering production significantly," said S&P credit analyst Lawrence Orlowski in the rating release.

Lear is a Southfield, Mich.-based supplier of automotive seating systems, electrical distribution systems and electronics products.

Neiman drops

Neiman Marcus' term loan traded down on Tuesday as the company announced plans to revise the interest payment on its senior notes, according to a trader.

The term loan was quoted at 68½ bid, 70½ offered, down from 70 bid, 72 offered on Monday, the trader said.

"It was 68, 70 this morning. Down before PIK news even came out. Probably affected the bonds more," the trader added.

On Tuesday morning, Neiman Marcus revealed that it has elected to use the payment-in-kind feature of its outstanding 9%/9¾% senior notes due 2015 instead of making cash interest payments for the interest period starting on Jan. 15 and continuing through April 14.

The company said in an 8-K filed with the Securities and Exchange Commission that it made the choice to pay PIK because of the "dislocation in the financial markets and the uncertainty as to when reasonable conditions will return."

The company also pointed out that it does have $576.3 million of unused borrowing available under its $600 million revolving credit facility, but current market conditions made its interest payment choice appropriate.

Neiman Marcus is a Dallas-based high-end specialty retailer.

LCDX, cash soften

Also in trading on Tuesday, LCDX 10 and the overall cash market felt weaker, but stocks were close to unchanged on the day, according to traders.

The index was quoted at 76.20 bid, 76.50 offered, down from Monday's levels of 77 bid, 77.50 offered, traders said.

As for the cash market, one trader said that the market "overall was down a quarter to a half. Few buyers. Volume was pretty light."

A second trader, however, found that in the morning the cash market was down about a half to three quarters but firmed backed up in the afternoon. "More buyers coming in. We may be down a quarter on the day right now but not much more," the trader added.

Meanwhile, Nasdaq closed up 7.67 points, or 0.50%, Dow Jones Industrial Average closed down 25.41 points, or 0.30%, S&P 500 closed up 1.53 points, or 0.18%, and NYSE closed down 12.19 points, or 0.22%.

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