Delta bonds slip after numbers; Adelphia bank debt better bid

By Paul Deckelman and Sara Rosenberg

New York, July 19- Delta Air Lines Inc. bonds were seen having fallen back Monday after the Atlanta-based airline released its second-quarter numbers - showing a nearly $2 billion loss against a year-ago profit.

Among bank-loan investors, the paper of Adelphia Communications Corp. unit FrontierVision was seen a "little better bid" Monday, as the overall market sentiment towards the company seemed to have improved in the wake of last week's announcement that advisors have been retained to assist in a potential sale.

A trader quoted Delta "a little weaker," with its 8.30% notes due 2029 seen down a point at 38.5 bid, 39.5 offered, although he saw Delta's 7.70% notes due 2005 actually up half a point at 64.5 bid. 65.5 offered.

Another trader saw the 8.30s push as high as 42 bid, before settling in at 38 bid, 39 offered "actually a little weaker on the day." He speculated that perhaps the bonds got an initial bounce because Delta hadn't lost as much money as some in the market were expecting, but then fell back as the truth sank in - that Delta is continuing to bleed money at an alarming rate, especially with unrestricted cash falling to $2 billion from $2.2 billion the quarter before and $2.7 billion at the end of last year (see report elsewhere in this issue).

"The market initially reacted favorable - but then it went down," he said of the issue.

He saw the 7.70s at 63 bid, 65 offered, down half a point to a point.

Another trader said that he had seen the 7.70% notes quoted up half a point to a point at 63.5 bid, 65.5 offered - but stressed that the level was before the company's mid-afternoon ET conference call, at which senior executives continued to underscore the seriousness of the troubled air carrier's situation.

However, he said that "the stock was up on the day [up 44 cents, or 8%, in New York Stock Exchange dealings, to $5.94, on volume of 11 million shares, twice the norm], so the call must have gone OK."

He saw Delta's 8.30% notes around the 37-39 area.

Loral higher again

Elsewhere, satellite operator Loral Space & Communications were "a little higher," a trader in distressed bonds said, quoting the bankrupt New York-based satellite operator's 9 ½% subordinated notes at 32 bid, 35 offered, "maybe a little higher," while the company's Loral Orion 10% notes due 2006 were at 76 bid, 78 offered, which "might have been up a little."

However, he said that "it's not like there was all kind of quotes" on the issue, which usually happens if something is actually going on with the company.

The Loral Orions have been steadily pushing up to around the 75-76 area, although here hasn't been any fresh news out on the company that would explain such a move.

A trader last week had told Prospect News that some investors seemed to be of a mind that the company's valuation is better than what management originally said.

FrontierVision loan reaches paper

Adelphia's FrontierVision bank paper was being quoted at par bid, up from 99.75 bid, a trader said, in apparent response to better investor sentiment regarding the prospect that the Greenwood Village, Colo.-based cable operator might be sold, something many creditors would like to see.

Last week, Adelphia announced that it had hired UBS Investment Bank LLC and Allen & Co. LLC as its financial advisors and Sullivan & Cromwell LLP as its legal advisors for the sale of the company. The selections are still subject to review and approval by the United States Bankruptcy Court for the Southern District of New York.

Willkie Farr & Gallagher LLP will continue as Adelphia's lead legal counsel for the Chapter 11 process. Lazard Freres & Co. LLC will continue to provide financial advice to the Colorado cabler on its potential reorganization.

In bond trading Monday, a market source saw Adelphia's 10 7/8% notes due 2010 at 97 bid, unchanged on the day.

Traders said most of the company's other bonds were in that same mid-to-high 90s context, although that is still about eight to 10 points below the recent highs Adelphia reached on speculation that cable giant Time Warner Cable might make a play for Adelphia's assets - or even try to buy the whole company itself.

Pegasus bonds steady

A market source saw Pegasus Satellite & Communications Inc.'s bonds "pretty much where they had been, no big news there," with the Bala Cynwyd, Pa.-based satellite television programming distributor's 11¼% notes at 59 bid, 61 offered. Its 12½% notes due 2007 were up about half a point at 58.5 bid.

There was no fresh news seen out on Pegasus, which filed for Chapter 11 protection in early June as part of its ongoing battle to hang onto its exclusive right to distribute DirecTV service to its 1.1 million mostly rural customers - a set up that DirecTV itself has been trying to end for months. The bond have recently gotten a boost from market rumors that DirecTV might try to settle the long-running battle between the two companies by making what Pegasus would consider a fair offer to purchase the rights to its customers.

Parmalat Finanzaria SpA's bonds were seen anchored in a 13-14 context, even as the bankrupt Italian-based dairy products maker was heard to have reached agreement on the sale of its Mexican assets, part of the debt-laden company's worldwide effort to shed non-core assets.

And a trader saw the recently strong Mirant Corp. bonds pretty much unchanged Monday, with the parent's paper, such as its 7.40% notes, holding steady at 58. The bankrupt Atlanta-based energy operator's Mirant Americas Generating Inc. paper, such as its 7.20% notes due 2008 were seen steady in a 79-80 context.

All told, the trader said - echoing an assessment other bond traders had also ventured - "the day was just a lot of blah."

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.