Delphi up on GM news; Auto sector firms; Winn-Dixie, Fremont 'big movers' on week

By Stephanie N. Rotondo

Portland, Ore., May 25 - As expected, Friday was a quiet day in distressed bond trading, with traders reporting that many market players had all ready begun to enjoy their long weekend.

"There was not much going on," one trader said. "It was very dead."

"Not a lot of guys are in today," said another trader, who added that most trades were random prints and light in volume.

"Maybe it's better to buy than sell going into the weekend," he said.

Traders also reported that most distressed names had remained unchanged over the day.

Still, one trader is seeing an overall lag in activity.

"There is less and less distressed [market activity] these days," he said.

However, in a day with little activity, the big news revolved around distressed automotive parts maker Delphi Corp. A trader said its bonds were up across the board, as former parent General Motors Corp. announced how much it expected it would be responsible for in its Delphi exposure.

Traders also noted that names in the automotive sector were up in general, with no news moving the bonds.

Many names that had been active during the week stabilized come Friday, with several making the "big names" list. Companies earning that distinction included Winn-Dixie Stores Inc., Fremont General Corp. and Fedders Corp.

Delphi up on GM news

A trader said Delphi's bonds were "up in general across the board on the back on the GM news," which he called the only big news of the quiet day.

He pegged the 8½% notes at 120 bid, up from their earlier levels of 118.25 to 118.75, on round lot trades. He said the notes saw several odd lots prints around 115.

The trader also saw the 7 1/8% notes due 2029 up a point at 116 bid, up from the previous levels of 115 bid, 116 offered.

Distressed automaker General Motors said Thursday it expected a $1 billion charge in the second quarter, as well as paying about $7 billion to cover retirement costs for Delphi workers, a former parts division of the automaker.

In its filing with the Securities and Exchange Commission, GM said the overall amount expected in its Delphi exposure is closer to the high end of the previously set range of $6 billion to $7.5 billion. The company also said Cerberus Capital Management's pullout from Delphi's exit financing deal would not materially change its responsibility to the automotive parts supplier.

Dura, Remy move higher

Meanwhile, other names in the distressed autosphere continued to surge higher. Dura Automotive Systems Inc.'s bonds were called up a little on "follow through." "Folks are wanting to buy before they come back next week," a trader said.

The trader quoted the 9% notes due 2009 at 12.25 bid, 12.75 offered and the 8 5/8% senior notes due 2012 at 50.5 bid, 51.5 offered.

At another desk, a trader saw the 8 5/8% notes doing "some trading" in an otherwise dull market at around 50 bid, 51 offered, right where they had been.

Another trader quoted those bonds at 50.5, up 0.25 point, but said that the company's 9% notes had pushed as high as 12.25 bid after closing Thursday at 10, but then came off that peak level to end at 11.625 around noon ET, when the market essentially shut down ahead of the holiday.

The trader also saw Remy International Inc.'s bonds firming, its 9 3/8% notes due 2012 at 62 bid, 63 offered. He said he had not heard anything new out on the company.

"There are not any new rumors out today," he said.

Another trader saw the Remy bonds "moving around," quoting the 9 3/8% notes at 62, which he called "up a couple of points."

He said that the bonds were better on "not a lot of activity. They were up on thin volume. If more people were in, they would trade back down," following their recent run-up.

Big movers of the week

Though called unchanged come Friday, Winn Dixie's stubs made the "big names of the week" list, according to one trader, who called the bonds 4.5 points better over the course of the week. The stubs closed the week in the 12 levels.

Fremont General also made the list, gaining about 5 points on week after announcing it would sell its commercial real estate lending business, leaving the financial institution a bank-only business.

The trader quoted the 7 7/8% notes due 2009 at 99.25 bid, 99.5 offered. The bonds have been edging closer to par all week.

On the downside, Fedders' notes were called "down a couple points" on the week, its 9 7/8% notes due 2014 at 37.5 bid, 38.5 offered, though still up from its lows earlier in the week.

Calpine firms

After seeing losses at the beginning of the week, Calpine Corp.'s bonds have been rebounding a little before the holiday weekend.

A trader said the San Jose, Calif.-based power company's 8½% notes due 2011 were better at 133 bid, 134 offered.

Movie Gallery gains slightly

A trader saw Movie Gallery Inc.'s 11% notes due 2012 as having "moved a little today" to around the 87.5 bid area, which he called up half a point, after the credit had firmed smartly on Thursday by 3 points on market rumors regarding a possible debt-for-equity exchange.

"Decent size has traded in that name all week long," he said, adding "they bounced up to that level on [expectations] that the bonds might be tendered for - a week ago, they were trading at what, 78?"

Broad market better

A trader quoted Bally Total Fitness Corp.'s 10½% notes due 2011 at 98 bid, 98.5 offered and its shorter 9 7/8% notes at 92 bid, 93 offered, but said not much was going on in the credit, an assessment another trader concurred with.

The first trader also saw Tembec Inc.'s 8 5/8% notes at around 60 and its other bonds around 54, pretty much the same as before.

Another trader quoted Tembec's 8 5/8% notes "up a couple points" at 60 bid, 61 offered.

Paul Deckelman contributed to this article.

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