Cash falls again but some buyers emerge; GM, Ford, Alltel, Neiman fall victim to heaviness; LCDX dips

By Sara Rosenberg

New York, Oct. 8 - The cash market in general continued to be plagued with an overabundance of paper but, on the par side, some real money buyers did surface after levels dropped by a few more points early on in the day.

Some names that were down on Wednesday included General Motors Corp., Ford Motor Co., Alltel Corp. and Neiman Marcus Inc., although these were by no means the only issuers to succumb to the selling pressure.

Also in trading, LCDX 10 spent another session in a downward spiral as equities were volatile and ended weaker on a day-over-day basis.

Cash overall headed lower once again during the trading session on both the par and the distressed side, but par names did end up attracting a little bit of attention from buyers later on in the day, traders told Prospect News on Wednesday.

Cash can't rebound

According to one trader, par names were down anywhere from one to three points on the day, depending on the name, and although some buyers did step in, things didn't really rebound from their morning levels.

"Most of the activity in size I think is happening in the par market. At least we are seeing some real money buying. A little bit of a different element. Before, we were just selling it to each other," a second trader remarked.

"[Market's] been softened up. Down another couple of points this morning and then saw some people stepping in. There's plenty of paper to go. Real money guys know that, but right now they're just nibbling," the trader continued.

"Just a lot of volatility. A lot of churning. Nothing really credit specific," a third trader said.

"For the most part things are down. [How much] depends on the name. Who knows what's going on. Stocks started to rally late day and then they crashed again at the end of the day," the trader added.

Distressed activity lighter

Meanwhile, the distressed loan cash market was also down on Wednesday. However, it did not see the same type of buyers step in as the par market.

"Overall market still down. Seeing some people sniff around on some paper, but still very heavy. Lot of people need liquidity at the moment," the trader said regarding distressed names.

"Distressed [is] down two to three points. Very quiet. Things trading in very small size," the trader added.

General Motors, Ford retreat

General Motors and Ford were just two examples of how the secondary market suffered on Wednesday, as well as how it has been punished over the past few weeks, according to a trader.

General Motors, a Detroit-based automotive company, saw its term loan quoted at 53½ bid, 55½ offered, down from Tuesday's levels of 56 bid, 57 offered, the trader said.

By comparison, at the start of this month, General Motors' term loan was quoted in the lower 60s and late last month it was more like in the 70 context.

As for Ford, a Dearborn, Mich.-based automotive company, its term loan was quoted at 54 bid, 56 offered, down from previous levels of 55½ bid, 57½ offered, the trader remarked.

Like General Motors', Ford's term loan was quoted in the lower 60s at the very start of this month. Late last month, the term loan was see in the upper 60s to 70s context.

Alltel also hit

Alltel, which usually trades a lot given that it is such a large liquid name, is another issuer that has been experiencing declining levels even though the paper would be repaid in the near term, assuming the merger with Verizon Wireless is successfully completed, according to a trader.

The term loan B-2 was quoted at 91 bid, 92 offered, down from Tuesday's levels of 92 bid, 93 offered, the trader said.

"Some are all punting it out and getting cash and some are waiting to get taken out," the trader said.

In June, it was announced that Verizon Wireless entered into an agreement to purchase Alltel from TPG Capital and GS Capital Partners for about $5.9 billion.

The parties are targeting completion of the transaction by the end of the year.

Recently, there has been some chatter that the transaction may not go through, but reports then emerged saying that Verizon Wireless is still very much committed to the deal and that it is on track to close in the expected timeframe.

Alltel is a Little Rock, Ark.-based provider of voice and advanced data services. Verizon Wireless is a Basking Ridge, N.J.-based wireless voice and data network.

Neiman trades down

Neiman Marcus' term loan was yet another casualty on Wednesday, with traders blaming the overall technical picture more than the poor September revenue results that were announced.

The term loan was quoted at 74 bid, 77 offered, down from 77 bid, 80 offered, traders said.

"Everything is down. You don't expect any numbers to come out good now," one trader added.

For the five weeks ended Oct. 4, Neiman reported total revenues of $415 million, down 11.1% from $466 million for the five-week period ended Sept. 29, 2007.

Comparable revenues for September were $406 million, down 12.9% from $466 million last year.

"September was a challenging month for us given the country's financial crisis, the impact of Hurricane Ike, as well as difficult comparisons with last year's 100th anniversary events," said Burt Tansky, chairman and chief executive officer, in a news release.

"Based on our September performance and the current economic environment, we expect customer demand will remain weak for an extended period of time. As a result, we currently anticipate that our fall season gross margin will decline on a year-over-year basis and that inventory levels will be higher than planned. Our entire team is focused on stimulating sales, lowering inventory levels, reducing expenses and evaluating all capital projects," Tansky added in the release.

Neiman Marcus is a Dallas-based high-end specialty retailer.

LCDX softens

Continuing the trend, LCDX 10 had another down day as stocks ended lower after being "all over the place today" following an emergency 50 basis point cut in the federal funds rate to 1.5%, according to a trader.

The index was quoted wide at 88.45 bid, 89 offered, down from Tuesday's levels of 89.50 bid, 89.80 offered, the trader said.

A second trader had the index quoted a little tighter at 88.75 bid, 89 offered.

Moving to equities, Nasdaq closed down 14.01 points, or 0.8%, Dow Jones Industrial Average closed down 189.01 points, or 2%, S&P 500 closed down 11.29 points, or 1.13%, and NYSE closed down 82.03 points, or 1.28%.

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