Ford, GM sales slip, bonds drop; Charter paper lower on tender; Level 3 weaker on debt concerns

By Stephanie N. Rotondo

Portland, Ore., Oct. 1 - Ford Motor Co. and General Motors Corp. reported monthly sales figures Wednesday and, as a result, their bonds declined.

Ford reported a hefty decline in its sales, while GM's figure came in above expectations. Still, Ford paper dropped almost 5 points on the day and GM debt fell at least 2 points.

Charter Communications Inc.'s bonds continued to slowly drift lower on the back of a tender offer for up to $100 million in debt announced Tuesday. Level 3 Communications Inc.'s notes were also deemed weaker on the day.

The broad market was mostly lower as well, as market players continued to watch Main Street for some direction.

"Quotes are few and far between," one trader said. "Accounts are still trying to figure out where they ended up last quarter."

"It just still feels like there is some liquidation going on," said another trader.

"We'll see if they vote tonight," he added, referring to the proposed Senate vote on the government bailout plan. "That will set the tone for tomorrow."

Ford, GM numbers slip

Ford Motor paper lost nearly 5 points on the day, while sector peer General Motors dropped at least 2 on the back of disappointing sales figures.

One market source called Ford's benchmark 7.45% notes due 2031 down 4.5 points to 39.5 bid, 40.5 offered. GM's benchmark 8 3/8% notes due 2033 were meanwhile down a deuce at 36.5 bid, 38.5 offered.

At another desk, a trader saw Ford's 5.7% notes due 2010 down at 75 from 77 previously. He also saw GM's lending arm, GMAC LLC, weaker, its 7¾% notes due 2010 at 59 from 60 previously.

Another source called Ford's 7% notes due 2013 down 4.75 points at 58 bid, while GM's 7 1/8% notes due 2013 slipped 4 points to 43 bid.

An ever-tightening credit market couple with economic concerns and rising gas prices were blamed for hefty declines in the automakers sales last month. Dearborn, Mich.-based Ford reported a 34% decline in sales, its worst month this year. Detroit-based GM saw its sales drop 16%. The better performance - at least compared with its peers - was attributed to the company's recent employee pricing promotion. Still, GM's figures beat expectations.

During its sales conference call, Ford compared the last few days to a natural disaster. As investors look to Washington to see whether the economy will pick up or grind to a halt, both companies are seen as vulnerable.

In an afternoon report, Gimme Credit analyst Shelly Lombard said that Ford likely has at least two years of liquidity, while GM may only have a couple quarters, given recent cash burn rates.

"We remain concerned about GM's near-term cash burn, especially since current economic issues will impact revenue and potentially offset the positive impact of its $10 billion cost savings plan," she wrote.

In related names, Goodyear Tire & Rubber Co.'s 9% notes due 2015 fell to 98, a trader said. He noted that the bonds were at 105 bid, 106 offered just a few weeks ago, but have been losing about a point a day since then.

"In general, those bonds were down 1 to 2 points," he said.

Charter reacts, Level 3 slips

Charter Communications' debt continued to see slight losses, just one day after the company announced a tender offer for up to $100 million in notes.

A trader quoted the 11% notes due 2015 at 64 bid, 65 offered, while another source deemed the 8% notes due 2012 down 2.5 points at 89.25 bid.

The St. Louis-based cable services provider said it would exchange up to $100 million of five series of notes linked to the holding company. Traders have previously called Charter one of the most levered companies in the market.

Elsewhere, Level 3 Communications' paper was called "fairly active" by a trader, who saw the 9¼% notes due 2014 down a couple at 72 bid, 73 offered.

Another source called that issue down nearly 5 points at 72.75 bid.

Level 3 has performed better over the year, generating modest growth and positive cash flow potential. The company has stepped away from its aggressive M&A approach to focus on cutting costs. However, the company still has almost $7 billion in long-term debt, which could bring the balance sheet down amid the current economic turmoil. Level 3 also is faced will slowing broadband traffic.

Broad market under pressure

Lehman Brothers' senior paper regained a bit of ground, closing at 13.5 bid, 14 offered, versus 12.5 bid, 13 offered Tuesday.

Washington Mutual Inc.'s holding company debt remained active, ending the day at 63 bid, 64 offered, which a trader called unchanged.

Meanwhile, Nuveen Investments' 5½% notes due 2015 slipped to 39. A trader said that was about in line with the last trade around 40 a week ago.

Idearc Inc.'s 8% notes due 2016 were called "quite active," trading around 26, a trader said. Another trader pegged the issue at 25 bid, 26 offered. Dex Media Inc.'s 8% notes due 2012 fell 2 points to 45 bid.

Among retailers, Blockbuster Inc.'s 9% notes due 2012 closed around 67, which a trader called "down a good bit."

"I would have pegged them in the low-70s before," he said.

The Star Tribune's first-lien loan fell to 34 bid, 36 offered as the company elected to not make a $9 million quarterly interest payment.

With no specific or sector news out, casinos were seen drifting lower during the session.

Station Casinos' 6½% notes due 2014 fell to 27 bid, 28 offered from around 30 previously. MGM Mirage's 6 5/8% notes due 2015 slipped over 4 points to 67.25 bid, while Harrah's Entertainment LLC's 5¾% notes due 2017 dropped more than 3 points to 24 bid.

Boyd Gaming's 7¾% notes due 2012 finished at 85.5 bid, down 2.5 points.

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