Owens Corning bank debt firmer; Delphi bonds also move up

By Paul Deckelman and Sara Rosenberg

New York, May 18 - Owens Corning's bank debt traded a touch better during Thursday's session, traders said, as investors continued to focus on when the paper will be repaid and what kind of profit can be made until then.

However, traders in the junk bond market saw no improvement in the Toledo, Ohio, building materials company's notes, which had fallen sharply from the levels they held a week ago on profit-taking.

Elsewhere in the distressed markets, Delphi Corp.'s bonds were seen about a point or so higher, recovering from the erosion seen on Wednesday in the wake of the latest news about the bankrupt Troy, Mich.-based automotive parts manufacturer - which is also the single largest parts supplier to giant carmaker General Motors Corp.

Owens Corning's bank debt was seen trading in the 156 to 157 context earlier in the day, before settling at 155.5 bid, 156.5 offered by the close, a trader said. On Wednesday, the bank debt had gone out at 155.25 bid, 156 offered.

"It's a fairly defensive piece of paper at this point. You guess when you'll be taken out and figure out a yield that makes sense," the trader added.

The bank debt of another asbestos-challenged bankrupt company, Armstrong World Industries Inc., also traded a bit higher during market hours as some players seemed to find the recent low levels that the paper has dropped to as a good buying opportunity, according to a trader.

The Lancaster, Pa.-based floor, ceilings and cabinet company's bank debt closed out the day quoted at 81 bid, 82 offered, but had traded as high as 82 earlier in the session, the trader said. By comparison, on Wednesday, the bank debt went out at 79.5 bid, 81 offered after trading at 80.5 and 81 during the session.

At the close last Friday, the bank debt had been quoted at 89 bid, 90 offered but since the start of this week it has been progressively falling lower and lower, making it attractive to some investors who hope that the tumble has reached a floor.

Over on the bond side of the fence, traders saw Owens Corning's notes continuing to languish in the lower teens, the range to which they had fallen over several days this week after hitting spectacular highs in the 122-123 area late last week, after Owens Corning announced the long-anticipated settlement with its thousands of asbestos claimants, and other creditors, that will allow the company to finally emerge from bankruptcy this year after having been in Chapter 11 restructuring since 2000.

The bonds had been hammered down over the past few sessions by profit-taking - although they remain well above the par-area levels at which they were trading before the reorganization plan settlement was first announced.

A trader saw Owens Corning's 7% notes due 2009 at 112 bid, down from 112.5, and its 7½% notes due 2018 at 113.25 bid, well down from 115 previously.

Another trader saw the Owens Corning bonds at 113 bid, 115 offered, down from 114 bid, 116 offered previously, and saw Armstrong's notes meanwhile dipping to 83 bid, 85 offered, from 84 bid, 86 offered.

Delphi bonds gain

Traders saw some improvement Thursday in Delphi's bonds, which had retreated on Wednesday, amid the general market downturn and on general investor angst about the company's labor situation, following an overwhelming vote by its unionized hourly work force members to give their union chiefs the authority to call a strike against the beleaguered company.

But on Thursday, a trader said, Delphi's 6½% notes due 2013 was at a wide 74 bid, 77 offered, up about a point from Wednesday's levels.

Another trader agreed that Delphi was a little better bid, with its 6½% notes due 2009 half a point better at 77 bid, 78 offered.

Yet another trader quoted the Delphi 7 1/8% notes due 2029 at 76.25 bid, 77.25 offered, up 1¼ points.

GM holds steady

Elsewhere in the automotive realm, former Delphi parent - and still major Delphi customer - GM's benchmark 8 3/8% notes due 2033 were seen pretty much unchanged at 73.375 bid, 73.875 offered.

GM investors have been watching Delphi's situation with some degree of nervousness, since the Troy company is GM's largest single parts supplier and a strike by Delphi's 34,000 hourly employees over management's efforts to void their costly contracts and impose a more severe wage and benefits schedule would likely mean massive disruptions to GM's production.

A trader saw GM's General Motors Acceptance Corp. financing arm's 8% notes due 2031 up ¼ point, while rival Ford Motor Co.'s 7.45% notes due 2031 were also up a quarter point, at 72.25 bid, 72.75 offered.

Also among troubled automotive names, Exide Technologies' 10½% notes due 2013 were seen down two points on the session at 81 bid, 83 offered, while bankrupt Dana Corp.'s 5.88% notes due 2014 were ½ point lower at 79.5 bid, 80.5 offered.

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