Basell breaks, trades up to around 102; Calpine seesaws on agent inquiry rumors; Delphi weakens

By Sara Rosenberg

New York, Sept. 20 - Basell allocated its credit facility with the U.S. institutional paper rising to the 102 type area before day's end.

Also, in secondary happenings, Calpine Corp.'s second-lien bank debt toppled during the session on rumors of an inquiry from its bond collateral agent, but the paper did manage to recoup some - not all - losses before the close.

And, Delphi Corp.'s revolving credit facility and term loan succumbed to the bankruptcy speculation and high-yield bond and market tone pressure as levels actually dipped lower in active trading.

Basell's U.S. institutional term loan bank debt freed up for trading on Tuesday, with the paper quickly moving up from opening levels to close out the session wrapped around 102, according to a market source.

More specifically, the bank debt was seen at 101 bid immediately on the break but instantaneously moved to 101½ bid and then inched even higher to 101¾ bid, 102¼ offered by the end of the day, the source said.

Basell's credit facility consists of a €540 million term loan A, a €530 million term loan B (of which some went to U.S. players) and a €530 million term loan C (of which some went to U.S. players). All in all, U.S. investors got about $360 million in term loan B and term loan C paper, the source added.

The credit facility also contains a revolver tranche.

Merrill Lynch and Credit Suisse First Boston acted as the lead banks on the deal.

Proceeds were used to help fund Access Industries' leveraged buyout of Basell from BASF and Shell Chemical for €4.4 billion, which was actually completed back in August.

The company also priced an about €1 billion equivalent issue of 10-year senior notes at par to yield 8 3/8% in early August to help fund the LBO as well.

Basell is a Hoofddorp, The Netherlands-based manufacturer of polyolefins for applications in appliances, as well as in food and beverage packaging.

Calpine flounders on rumors

Calpine Corp.'s second-lien bank debt bounced around during market hours as rumors about potentially negative questions from its bond collateral agent were whispered amongst players.

In fact, the bank debt lost about 3 to 4 points after the rumors surfaced but made a valiant effort of re-energizing itself as it climbed its way higher late in the day to close out the session with about only a 1 point loss, according to a trader.

"There was a market rumor that a letter was sent by the collateral agent for the first-lien bondholders questioning where Calpine was using proceeds that they got from the sale of the natural gas assets," the trader explained.

Other sources said that the debt could have also been affected by fears that potential higher natural gas prices could have adverse effects on the company.

On the heels of this talk, Calpine's second-lien bank debt dropped to around 78 bid, 79 offered, the trader said. However, by late day, the bank debt started to come back with levels moving up to 80 bid, 81 offered, the trader added.

At 5 p.m. ET on Tuesday, Calpine officials began speaking at Banc of America Securities' 35th Annual Investment Conference.

In the presentation, officials updated participants on the company's strategic initiatives, which include evaluating additional asset sales, reducing plant operating costs, reducing fuel costs and reducing debt.

Since May, the San Jose, Calif.-based power company has repurchased/redeemed around $2 billion in debt.

Delphi softer

Delphi's bank debt traded lower on the day as the auto sector in general was off, the overall secondary market was somewhat heavy, the company's bonds kept toppling and bankruptcy rumors continued to swirl, according to traders.

The revolver was quoted at 97½ bid, 98 offered by one trader and at 97¾ bid, 98¼ offered by a second trader. Both traders claimed that the paper was down by about half a point on the day.

As for the term loan, that was quoted at 101½ bid, 102 offered by a trader. On Monday, a different trader had the term loan closing out the session at 101¾ bid, 102¼ offered.

Delphi is, and has been for weeks, looking to former corporate parent General Motors Corp. for some sort of financial bailout. The company has warned that it could be forced into Chapter 11 if it does not get concessions from the United Auto Workers union and help from GM.

Delphi has also said that a filing would come before Oct. 17 when federal bankruptcy laws will change, becoming less friendly to debtor companies as they will be given less time to come up with a reorganization plan.

Over the past week or so, the company's bonds have been taking a beating as people are starting to think that a Chapter 11 bankruptcy filing may be more and more likely.

The company's revolver, however, has been climbing higher because investors believe that, if necessary, the revolver debt will be rolled into a debtor-in-possession facility, resulting in a par pay down.

Meanwhile, the term loan has basically been staying wrapped around the 102 context because that paper is pre-payable at a call premium of 102.

But, as all the market technical and specific issuer factors combined Tuesday, the bank debt finally gave in to the pressure, resulting in weaker levels for the first time in a while.

Delphi is a Troy, Mich., supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology to vehicle manufacturers.

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