Tousa notes weaker; Delphi bonds drift lower; Swift Transportation better on numbers

By Stephanie N. Rotondo

Portland, Ore., Oct. 31 - The Federal Reserve cut a key interest rate by another quarter point Wednesday, but that did little to stir up activity in the distressed market.

"It didn't mean much of anything," said one distressed trader. "The cut was totally expected. The stock market didn't even know what to do with it to begin with."

"Death, taxes and month-end pricing are the only things that are guaranteed," quipped another trader. "The Fed cut allowed everyone to go back to sleep. 'Wake me up in December' was the theme of the day."

As the market tried to figure out what to do with the central bank's decision, many names in the junk sector continued their declines started in the previous session.

Technical Olympic USA Inc.'s bonds fell another point or so, attributed to follow-through from the day before when the market was hit with news that the company had amended its indentures.

Delphi Corp.'s debt also slipped another point. The bonds began losing ground in Tuesday's session after the company said it was having difficulty obtaining exit financing and would likely have to cut payouts to some of its creditors.

On a positive note, Swift Transportation Co. Inc. released better-than-expected numbers for the third quarter, which sent its bonds up as much as 4 points on the day. The financial statement was not released to the general public.

Tousa notes weaker

Technical Olympic's bonds continued their slide on news released earlier in the week that the company had decreased its borrowing power.

A trader said the bonds were down about a point, with the 8¼% notes due 2011 ending the day at 54 bid, 55 offered and the 7½% issues due 2011 and 2015 closing at 11 bid, 12 offered.

Another trader, however, said the senior paper - which includes the 8¼% notes and the 9% notes due 2010 - were up slightly at 54 bid, 56 offered. He added that the subordinated debt - the 7½% issues and the 10 3/8% notes due 2012 - slipped a little to 12 bid, 14 offered.

Another trader called the 8¼% senior notes down another 1.5 points at 53.5 bid, 55.5 offered.

At another desk, a trader pegged its 10 3/8% subordinated notes due 2012 also down another 1.5 points at 11.5 bid, 13.5 offered on "no news."

In an 8-K filed late Monday, the Hollywood, Fla.-based homebuilder said it reduced the size of its revolving credit facility as well as modified pricing on the revolver and first-lien term loan. The company also noted that it was looking into various asset sales as a way to bolster liquidity.

But one market source said that he had heard potential asset sales were not going as well as expected and the company was not pleased with the values it was getting on some of its assets.

Elsewhere in the sector, a trader said that Beazer Homes USA Inc.'s bonds were about unchanged from where they were on Tuesday, with the 8 5/8% notes due 2011 at 82.5 bid, 83.5 offered.

Standard Pacific Corp.'s 7% notes due 2015 were up by half a point to 73.5 bid, 75.5 offered.

Delphi bonds drift lower

Investors continued to be weary of the automotive realm after Delphi announced in the previous session that it would cut payouts to some of its creditors.

A trader said Delphi's bonds were not as active as they had been the previous trading day but were about half a point to a point softer. He quoted the 7 1/8% notes due 2029 at 90.5 bid, 91.5 offered and the 6½% notes due 2013 at 88.5 bid, 89.5 offered.

Another trader said he saw the 2013 issue trading around 89.5, while the 2009 paper closed at 89 bid, 90 offered. He placed the 7 1/8% notes at 90 bid, 92 offered.

Yet another source said that the 6.55% notes that were to have matured last year continued to lose ground, on top of Tuesday's retreat, falling to 90 bid, 91 offered from 91.875 bid, 92.875 offered.

Meanwhile, a trader called Dura Automotive Systems Inc.'s 8 5/8% notes due 2012 active and lower at 38.5 bid, 39.5 offered. Another trader, however, called the bonds unchanged at 38 bid, 40 offered.

The news that Delphi's search for financing was not going as planned hurt most other names in the sector, as several - including Dura and Federal-Mogul Corp. - are also still looking for cash to exit bankruptcy by year-end. Traders said that even names in other sectors, such as Calpine Corp., were affected by the news.

Swift better on numbers

In an industry that has been hurt by a weakening retail sector and climbing oil prices, Swift Transportation reportedly posted better-than-expected third-quarter numbers.

The positive figures boosted the trucking company's bonds as much as 4 points on the day. One trader pegged the 12¼% notes due 2017 around 64, while another placed the bonds at 63.5 bid, 64.5 offered. The second trader said the floating-rate notes due 2015 were also better at 64.25 bid, 64.75 offered.

Another trader said the 12¼% notes jumped to 63 bid, 64 offered from 60 bid, 61 offered. The trader cited good quarterly numbers, "which surprised everyone."

Because Swift went private earlier this year, its financials are not available through the Securities and Exchange Commission. Calls to the company were not immediately returned.

Broad market tidbits

While other companies are struggling to find exit financing, Solutia Inc. inked a deal that would give the company $2 billion to exit bankruptcy.

But the news of the deal did little for the company's debt, which was largely inactive on the session. A trader said all issues were trading just above par, which he called "surprising."

Also surprising was the lack of movement in IMAX Corp.'s bonds, as its 9 5/8% notes were accelerated and a bondholder asked the trustee of the indenture to file a lawsuit with the company.

"[There were] still no trades since last Thursday despite the news about the perennial thorn in their side," a trader said of the company's debt.

Meanwhile, a trader said Movie Gallery Inc.'s 11% notes due 2012 were remaining in the 28 bid, 30 offered context.

"People seem to think they are a good buy," he said.

Tembec Inc.'s 8 5/8% notes due 2009 were seen unchanged at 50 bid, 51 offered, while its 8½% notes due 2011 lost a point to end at 72.

Paul Deckelman contributed to this article.

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