Six Flags, Idearc, R.H. Donnelley bonds actively traded; Constar bonds weaken; Auto sector mixed

By Stephanie N. Rotondo

Portland, Ore., Aug. 18 - Six Flags Inc., Idearc Inc. and R.H. Donnelley Corp. were among the more active issues during Monday trading.

There was no news to prompt the action in Six Flags, but one trader speculated that a Barron's article could have caused the interest in R.H. Donnelley. That in turn could have helped sector peer Idearc. However, across the board, prices were virtually unchanged to slightly better.

Meanwhile, Constar International Inc.'s bonds continue to decline. The bonds started to fall last week after the company posted what one trader called "crummy" numbers.

In the automotive sector, Metaldyne Corp.'s bonds were either unchanged or better, depending on whom you asked. The company had held a conference call during the session. Also in the autosphere, General Motors Corp.'s benchmark issue ended the day unchanged following a market-wide trend.

Most active issues

Six Flags, Idearc and sector peer R.H. Donnelley were deemed some of the more active names trading during Monday's lackluster session. But market sources said that while volume in those names was decent, price movement was minimal.

Six Flags' 9 5/8% notes due 2014 were quoted at 56 bid, 56.5 offered, while the 12¼% notes due 2016 were seen at 93.5 bid, 94.5 offered. Both were dubbed unchanged.

"Those ones are not around that often," one trader said of the 12¼% notes.

There was no recent news to provoke the trading action, one trader said. Last week, the New York-based amusement park operator released its third-quarter results through mid-August, which showed an increase in attendance and revenue.

Meanwhile, Idearc's 8% notes due 2016 inched up to 43.25 bid, 43.5 offered versus Friday's level of 42.5 bid, 43 offered. R.H. Donnelley paper was called only slightly better, with its 8 7/8% notes due 2016 at 47.25 and its 6 7/8% notes due 2013 at 48. Idearc's term loan was slightly higher, quoted at 69¾ bid, 70¾ offered, up about an eighth of a point on the day, a trader said.

The trader explained that the bank debt was likely stronger, following the bonds.

According to one trader, R.H. Donnelley was "mentioned positively in Barron's last week," which might have given the debt "a little bit of a lift." In the Barron's article, the company's stock was reviewed positively. Associate editor Andrew Bary wrote that the risks could be worth it if the company is able to complete a turnaround.

Currently, R.H. Donnelley's stock is trading around $2, well off of its $68 high last August. But Bary believes that the company's equity - as well as its debt - could be a good play, given that there are no debt maturities until 2010.

"Thus, investors probably get a two-year 'look' at Donnelley's business before possible problems loom in 2010, when it will have $1.4 billion in maturing debt," he writes.

Constar slips following numbers

Constar International's bonds "continue to slide," a trader said, after reporting "crummy" numbers last week.

The trader pegged the 11% notes due 2012 at 36 bid, 38 offered.

"The offer side is real; I am not too sure about the bid side," he said.

Constar, a Philadelphia-based supplier of PET beverage containers, posted a net loss of $5 million for the second quarter. That compares to a loss of $4.8 million for the same period of 2007. Consolidated net sales, however, increased to $244.3 million from $240.2 million.

But the trader said there was one "kernel of hope": the Pepsi contract. According to the trader, the results of negotiations between the bottler and the soft drink maker are expected within the next couple of weeks.

Auto sector mixed

Metaldyne's 11% subordinated notes due 2012 were unchanged, even after a conference call held during Monday's session. A trader quoted the bonds at 14 bid, 15 offered but said he was not sure what happened during the call.

But another trader said the bonds got "a little bounce, post-conference call," with its 10% notes due 2013 at 26 bid, 27 offered and its 11% notes at 14 bid, 15 offered, up 3 and 2 points, respectively.

Elsewhere in the autosphere, Visteon Corp.'s 7% notes due 2014 gained more than a point to close at 52.5 bid. Delphi Corp.'s 6½% notes due 2009 gained half a point to 12 bid, 13 offered.

Another trader saw General Motors' benchmark 8 3/8% bonds due 2033 at 52 bid, 54 offered, unchanged on the day, while its GMAC LLC 8% bonds due 2031 fell 1 point to 56 bid, 57 offered.

At another desk, a trader called the benchmark notes unchanged at 52.5 bid, 53.5 offered, while Ford Motor's 7.45% bonds due 2031 ended half a point lower at 54 bid, 55 offered.

Broad market unchanged

Swift Transportation Co. Inc.'s 12½% notes due 2017 were unchanged at 39 bid, 41 offered. Claire's Stores Inc.'s 10½% notes due 2015 were likewise unchanged at 34 bid, 36 offered.

A trader saw Mrs. Fields Famous Brands LLC's 11½% notes due 2011 at 60 on very light trading, unchanged from Friday when the company announced its pre-packaged Chapter 11 filing.

OSI Restaurant Partners' 10% notes due 2015 continued to zig-zag, heading back up to 57.55 bid, up nearly a point from Friday.

Tronox Worldwide's 9½% notes due 2012 lost 1.5 points to end at 51.5 bid.

Is the end near?

"I didn't think anything could make Friday look good," said one trader about Monday's dismal performance.

Traders across the board deemed the day a quiet one, with little news to spark investors' interest - not to mention a declining stock market.

"Prices are virtually unchanged, and volume is non-existent," the trader added.

However, the trader speculated that the lull in the distressed market might be at - or at least nearing - "rock bottom."

Another trader agreed that the end of the drag was near, though he was not as hopeful that it would be sooner rather than later.

"We are closer to an end than a beginning," he said. "But there are still a lot of funding issues at banks. We still have to get through summer."

Still, with new issues hitting a 13-year low, the end might not be too far off, he opined.

"Mondays have typically been horrendous," he added - though market sources have also called Fridays abysmal as well.

Sara Rosenberg and Paul Deckelman contributed to this article.

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