Casinos hit a string of bad luck; bad news for Bally?; Tribune loan firms; Chrysler loan crashes

By Stephanie N. Rotondo

Portland, Ore., July 25 - After trying to hit it big earlier in the week, bonds in the casino gaming space ended Friday at least a point weaker across the board.

Trump Entertainment Resorts Inc.'s bonds fell a point, while Isle of Capri Casinos - dubbed "Isle of Debris" by one market source - fell as much as 2 points. Station Casinos continued to weaken after reports earlier in the week that the company was looking to do a debt exchange.

Meanwhile, some market players are starting to wonder what is going on at Bally Total Fitness. The gym operator, which exited bankruptcy late last year, has seen its bonds lose half their value in the last eight months. But the tight-lipped company is giving no explanation as to why, one trader said.

Tribune Co. is getting closer to unloading its baseball franchise, according to reports. The news has been helpful to the company's bank debt, which inched up slightly during the last session of the week.

However, news that Chrysler Corp. was leaving the leasing business behind did not help its term loan. That news caused a 10-point crash in the bank debt.

Casinos hit a string of bad luck

Casinos ended Friday's session about 1 point lower across the board, traders reported.

One trader called Trump Entertainment's 8½% notes due 2015 unchanged at 53 bid, 54 offered, but another saw the paper a point weaker at 52.5 bid, 53 offered.

Meanwhile, Isle of Capri continued to extend its losses, its 7% notes due 2014 down 1.5 to 2 points. One source pegged the issue at 70.25, while another placed the notes around 70.

"Isle of Debris," quipped on source.

Station Casinos' debt also remained heavy, with its 7¾% notes due 2016 at 72.

Station has reportedly requested information from bondholders, fanning rumors that the company is considering a debt-for-debt swap soon. The casino operator is scheduled to release its second-quarter earnings on Thursday.

Trump is slated to report its numbers on Aug. 7.

Bad news for Bally?

According to a market source, Bally Total Fitness held a conference call at 11 a.m. ET on Friday, though he was not sure what the call entailed.

"I think it was to discuss the new CEO," he said.

Michael Sheehan joined the Chicago-based fitness club operator on July 1, and the company was quickly slapped with a lawsuit from Sheehan's previous employer, 24-Hour Fitness.

24-Hour alleged that Sheehan would rely on "trade secrets" in his new position. Sheehan also reportedly signed a non-compete clause.

The trader said Bally's bonds did not trade during the final session of the week, though he had seen them the previous day at 45 bid. Bally's exited from Chapter 11 protection in October 2007, with the help of a multi-billion dollar investment from Harbinger Capital Partners. Since then, the company's bonds have gone from par to their current mid-40 level, leaving some to wonder what might be going on behind closed doors.

Cub sale helping Tribune loan

Tribune's term loan B was better on Friday as investors may still have been reacting to news that the company is moving closer to announcing the sale of the Chicago Cubs, according to a trader.

The term loan B was quoted at 71¼ bid, 72 offered, up from 71 bid, 71½ offered on Thursday, the trader said.

Recently, reports emerged that Tribune has narrowed the list of bidders for the Cubs to three to five groups, with all of them having bids of $1 billion or higher.

Tribune is a Chicago-based media company.

Chrysler loan crashes

In the autosphere, Chrysler's term loan plummeted on Friday and was quoted extremely wide after reports came out that the company was exiting the vehicle leasing business, according to a trader.

"They don't have the funding to do leases. [The company is] going to focus more on loans for people buying cars," the trader said.

Following the news, the company's term loan was quoted at 37 bid, 47 offered, down from Thursday's levels of 47 bid, 49 offered, the trader added.

Chrysler Auto is a producer and seller of Chrysler, Dodge and Jeep vehicles.

Meanwhile, Chrysler Financial Services LLC, a provider of financial services for vehicles in the Nafta region, saw its first-lien term loan quoted at 82 bid, 83 offered and its second-lien term loan quoted at 61 bid, 63 offered.

According to one trader, the first-lien term loan was up about a point on the day and the second-lien term loan was up about 2 points on the day. However, a second trader said that those levels on the first- and second-lien loans were unchanged from Thursday.

Among other U.S. automakers, General Motors Corp.'s benchmark 8 3/8% notes due 2033 were trading in a 55 to 56 context. While one trader who quoted them at 55 bid, 56 offered saw them only down half a point on the day, another noting only the drop between the final round-lot trades on Thursday and Friday, quoted them down almost 4 points on the day, at 55.5. A market source at another desk echoed that latter assessment.

Among the shorter-dated issues, GM's 7 1/8% notes due 2013 were seen 2 points lower at 61.

Another trader saw Ford Motor Co.'s 7.45% bonds due 2031 down 1 point at 53 bid, while another had them at 53 bid, 54 offered, down over a point on the session. Ford Motor Credit Co.'s 7% notes due 2013 dropped 2 points to end at 74, while its 7.8% notes due 2012 were down more than 1.5 points to the 78 level.

Among the parts suppliers, American Axle & Manufacturing Holdings Inc.'s 5¼% notes due 2014 dipped to 65.625 bid from 66.25 on Thursday, while its 7 7/8% notes due 2017 were seen by a trader at 66.5, unchanged from Thursday, when there had been no trading in the issue, but down 2 points from Wednesday. The slide followed the company's report of a $644 million second-quarter loss, mostly due to a lengthy strike by the UAW.

Visteon Corp.'s 7% notes due 2014 were down 1 point at 50 bid.

Elsewhere, "nothing was really trading" in Delphi Corp.'s bonds, according to a trader. He quoted the bonds generically at 17 bid, 18 offered.

Airlines fly the straight and narrow

UAL Corp., Northwest Airlines Corp. and AMR Corp. all held firm on Friday, unfazed by Standard & Poor's downgrading the ratings of each company, according to a trader.

Chicago-based UAL saw its term loan quoted at 73 bid, 75 offered, unchanged on the day, the trader said. S&P lowered UAL's corporate credit rating to B- from B and the rating was removed from CreditWatch.

Eagan, Minn.-based Northwest Airlines saw its term loan quoted at 77½ bid, 79½ offered, in line with Thursday's levels. Northwest's corporate credit rating was dropped by S&P to B from B+ and removed from CreditWatch.

And, Fort Worth, Texas-based AMR saw it term loan quoted at 90 bid, 92 offered, also unchanged, the trader remarked. AMR's corporate credit rating was lowered by S&P to B- from B and removed from CreditWatch.

"I think everyone has priced it in at this point," the trader added regarding the downgrades.

The rating agency attributed all of the companies' downgrades to expected heavy losses and negative operating cash flow caused by record high fuel prices.

Broad market mostly unchanged

Charter Communications Inc.'s 11% notes due 2015 closed "a smidge lower," a trader said, attributing the decline to "probably just some profit taking."

"Some of Charter's other issues are not really lower, so maybe it is just isolated," he said. He called the 11% notes down a point to 75.

GMAC LLC's benchmark 8% notes due 2031 ended unchanged at 61 bid, 61.5 offered.

Idearc Inc.'s 8% notes due 2016 were seen up 1 point at 59.5, while competitor Dex Media Inc.'s 8% notes due 2013 were down more than 2 points at 68 bid.

Bon-Ton Stores Inc.'s 10¼% notes due 2014 were down about 2.5 points to 55.

Sara Rosenberg and Paul Deckelman contributed to this article.

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