Calpine better on valuation hopes; Delphi firms; Fedders unchanged; James River up

By Stephanie N. Rotondo

Portland, Ore., Sept. 21 - Yom Kippur began at sundown Friday and many market players left their desks early to prepare for the Day of Atonement.

Several traders attributed the holiday to the lack of activity in the marketplace. The "buyer's fatigue" from the previous session seeped into the last trading day of the week as well.

Still, the market was seen generally firmer.

"Most names are up on the day," a trader said. However, he added that activity began to dwindle toward mid-afternoon.

"In general, the market is stronger," said another trader.

Calpine Corp. and Delphi Corp. once again made the top of the most-active list. Calpine's bonds were seen continuing to surge higher on valuation expectations and were deemed up as much as 10 points on the week. Meanwhile, Delphi bonds gained about 3 points on the day.

A plan for liquidation announced Thursday could mean good things for Fedders Corp.'s bondholders, a trader said. The bonds, however, remain essentially unchanged.

James River Coal Co.'s corporate debt is one of those quiet names that rarely move up or down, not to mention trades. Therefore, traders have been surprised at the activity in the name - especially given the fact that there is no news to drive the movement.

As the week closed, some market participants expressed frustration at the current state of the junk sector.

"People are still worried about credit," one source said. "Nobody wants to buy and those selling won't sell down."

Investors look to Calpine valuation

Calpine's bonds continued to move higher as investors looked forward to new valuation details.

A trader quoted the 7¾% convertible notes at 95 bid, 96 offered. He added that the bonds were up at least 10 points over the week.

Another trader saw the bonds up on the day, pegging the 8½% notes due 2011 at 108 bid, 108.5 offered, which he called 1 point better.

At another desk, a trader said that Calpine "was up again today," with the 8½% notes due 2008 at 109 bid, 110 offered, up from 107 bid, 109 offered previously.

The San Jose, Calif.-based company filed a second amended reorganization plan Wednesday. The plan calls for a new valuation, expected at least five days before the voting deadline.

Delphi paper stronger

A trader called Delphi's bonds stronger by "3 or so points on the day."

The trader saw Delphi's 6½% notes due 2009 and the 6.55% notes due 2006 at 92 bid, 93 offered.

He added that there was no particular reason for the gains.

Another source saw the 2009 paper with a 91 bid, while another trader quoted the debt at 92 bid, 94 offered.

Another trader saw the 6.55% notes move up to 91.75 bid, 93.75 offered after opening at 87 bid, 89 offered and said that all of the company's other issues had "gone up commensurately." He said of Delphi "I guess they're going to go back up to par, or better."

Yet another trader saw the 6.55% bonds at 92 bid, 93 offered, up 4 points on the day. He suggested that "with the UAW talks with GM appearing to continue to go well, that's probably a plus" for Delphi.

In the news, Delphi has hit another snag in its bankruptcy case as its unions are protesting a plan to pay executives up to $37.6 million in bonuses.

The United Auto Workers union asked the bankruptcy court overseeing Delphi's case to deny the plan, claiming it violates terms of a labor settlement reached in June. The union also calls the bonus payouts "destructive to employee morale."

A hearing on the plan is scheduled for Thursday.

In the rest of the autosphere, Federal-Mogul Corp.'s bonds were deemed 1 point better at 84 bid, 86 offered.

Another trader saw its 7¾% notes due 2006 up 3 points to 84 bid, 85 offered.

Visteon Corp.'s bonds were "up a couple," a trader said. Its 8¼% notes due 2010 moved up 2 points to 89 bid, 91 offered, while its 7% notes due 2014 were at 78.5 bid, 80.5 offered, up from 77 bid, 79 offered.

The 6½% notes due 2008 under Dana Corp. were unchanged at 81 bid, 83 offered.

Trader: Fedders' plan good for bondholders

A plan to liquidate could mean "good news" for Fedders' bondholders, a trader said.

The company told a bankruptcy court earlier this week that it would bring a plan before its creditors by the end of the year. According to the trader, liquidation "may mean [bondholders] get some value."

"Sell the pieces and call it a day," he said. "There is still some goodwill in the name."

The trader placed the 9 7/8% notes due 2014 at 15 bid, 15.5 offered, essentially unchanged.

James River bonds rally

James River Coal's bonds have been moving up over the last week or so, traders reported, but there is only speculation as to why.

One source said he saw the 9 3/8% notes due 2012 at 81 bid, 83 offered, up 10 points on the week. At another desk, a trader called the bonds 6 to 7 points better at 82.

Another trader placed the bonds at 82.5 offered.

He said that there was not anything in particular driving the bonds higher. However, the trader said he was a fan of the name and didn't know "why it was slammed into the high-60s, low-70s."

He speculated that the latest rally in the high-yield market was the reason for the gains.

Broad market mostly better

Winn-Dixie Stores Inc. stubs were quoted at 8 bid, 10 offered.

A source said Hines Horticulture Inc.'s 10¼% notes due 2011 were at 70 bid, while a trader called the bonds higher at 70 bid, 70.75 offered.

"Who knows what that is about," he said of the increase. It "could be short covering."

The trader also saw Trump Entertainment Resorts Inc.'s 8½% notes due 2015 at 84.5. Another trader agreed with that number, calling the bonds active and a half point higher.

Transmeridian Exploration Inc.'s 12% notes due 2010 traded at 95 bid, 95.25 offered, a trader said. He added that the activity in the usually quiet debt was likely due to "people thinking they are going to make a sale." He said there is a rumor that a "Chinese customer" is looking to buy part or all of the company.

Linens n'Things floating-rate notes were quoted at 71.25.

A trader called Blockbuster Inc.'s 9% notes due 2011 up at 91 bid, 92 offered.

Among mortgage lenders, a trader said there was "a little bit of activity" in Thornburg Mortgage Corp.'s 8% notes due 2013. He said the debt remained in the high-80s, "kind of where they have been."

The trader also saw Residential Capital LLC's 6 3/8% notes due 2010 "up a little bit" to 84 bid, 84.5 offered.

"It's a little better, relative to yesterday," he said, noting that the bonds were "in the same neighborhood just two days ago.

A trader saw Technical Olympic USA Inc.'s 9% notes due 2010 at 72.5 in early trading and called the 10 3/8% subordinated notes due 2012 unchanged at 38.

Paul Deckelman contributed to this article.

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