Tronox files, bonds gain; Ford mixed as company eyes federal funds; Nortel, Charter coupons loom

By Stephanie N. Rotondo

Portland, Ore., Jan. 12 - Distressed bond traders saw the market hit a stalemate Monday, as its early attempts to rebound were thwarted by losses in the equities.

Still, one trader said there were "still a fair number of buyers around," and the market lost only about half a point, generally speaking.

Tronox Worldwide Inc.'s bonds, however, gained about 5 to 6 points on the day despite news that the company had filed for bankruptcy. The chemical manufacturer said the filing was a move to deal with so-called "legacy debt."

Meanwhile, Ford Motor Co.'s short paper was trading actively during the session. But the bonds finished the day mixed, as word came out that the automaker might have to access federal bailout funds if sales continue to decline. The company has maintained that it would not need the money.

Nortel Networks Corp. and Charter Communications Inc. have interest payments coming due this week and market players are wondering whether those coupons will be paid. Nortel's debt slipped some during trading, but Charter bonds continued to gain, following Friday's increases.

Tronox files, bonds gain

Tronox bonds moved up during Monday's session, despite news that the company had filed for bankruptcy protections.

One trader saw the 9½% notes due 2012 quoted wide at 10 bid, 17 offered, while another placed the bonds at 16 bid, 16.75 offered. The second trader noted that the bonds were trading flat, given the news, and had gained from 10 bid, 11 offered last week.

The chemical company announced Monday it had filed for Chapter 11 to deal with debt gained from environmental cleanup and litigation costs handed down from Kerr-McGee Corp., the company it spun off from in 2006.

"A Chapter 11 filing is the best way to address the company's debt, in particular its legacy liabilities," Chief Executive Officer Dennis Wanlass said in a statement.

In court papers, Tronox said it had $1.6 billion in assets and $1.2 billion in liabilities as of Nov. 30, 2008. The company said it had spent more than $118 million in debt obligations since it went out on its own. Tronox essentially placed the blame for the filing on its former parent, noting that Kerr-McGee had reimbursed only $4 million for environmental costs, though it pledged $100 million.

Following the filing, both Moody's Investors Service and Fitch Ratings downgraded the Oklahoma City-based company's credit rating.

Ford mixed, eyes federal money

Ford Motor's short paper was called "very busy" by one market source, as the company looked to possibly get access to federal funds.

The source deemed the 7 3/8% notes due 2009 unchanged at 88 bid, 90 offered. Another source called the 7% notes due 2013 more than a point lower at 68 bid.

At another desk, a trader saw the 7 3/8% notes fall nearly a point to around 88.5, while the 9¾% notes due 2010 gained a point to close around 83.

The Detroit automaker had previously said it did not think it would tap bailout funds allotted to the industry amid an economic downturn. However, as demand for new vehicles continues to fall, the company may have to reverse its thinking.

Ford is forecasting that light vehicle sales in the U.S. will reach 12.2 million units in 2009. Chrysler LLC and General Motors Corp. have predicted anywhere from 10 million to 11 million units will be sold over the year.

But not everyone is as optimistic. HIS Global Insight last week cut its forecast to between 10 million and 10.5 million units. Last month, Ford told Congress that it would need as much as $13 billion if sales fell to that level.

Still, Ford executives have maintained that the company plans to go it alone, unless absolutely necessary.

Nortel, Charter coupons loom

Nortel Networks' bonds ended the session unchanged to slightly lower, traders reported.

A trader said the 10¾% notes due 2016 were "very active," closing unchanged at 26 bid, 27 offered. But another called the paper "down a point or so," its 10¾% notes around 26 and the floating-rate notes due 2011 around 24.

Toronto-based Nortel faces a $100 million interest payment on Thursday. If the company is unable to make the payment within the grace period, Nortel could be forced to file for bankruptcy.

Charter Communications also has a looming interest payment on Thursday and recent gains in the company's debt have caused some to speculate about what is going on "behind the scenes."

A trader called the 11% notes due 2015 unchanged at 21.5 and also saw the 10¼% notes due 2010 at 52.5. Another trader said there was "some activity" in the name. The 8% notes due 2015 were "up a good bit," he said, in the mid-80s, while the 10¼% notes gained 2 points to close at 52.5 bid, 53 offered.

Yet another source pegged the 8% notes at 85 bid, up 3 points on the day.

St. Louis-based Charter has entered into discussions with its noteholders regarding a potential restructuring. No news has been reported on the status of those negotiations.

Broad market turns downward

Washington Mutual Inc.'s floating-rate notes due 2009 slipped almost a point to 25.25, a trader said, with $15 million changing hands. Among other financials, GMAC LLC's 6 7/8% notes due 2017 dropped 4.5 points to 67.5 bid.

Vitro SAB's 9 1/8% notes due 2017 were among the more active issues of the day, sliding 1.25 points to 26 bid, 27 offered.

Idearc Inc.'s term loan B experienced some positive momentum during the trading session, according to traders. The term loan B was quoted by one trader at 36 bid, 39 offered, up a point on the day, and by a second trader at 37 bid, 39 offered.

Both traders agreed that the paper was pushed higher because some "retail buying" was taking place.

Neiman Marcus Group Inc.'s 9% notes due 2015 recovered nearly all of the losses incurred after the company posted weak December sales numbers on Thursday, traders said. The bonds closed in a "52-ish type range," a trader said.

A delisting from the New York Stock Exchange did little to Pilgrim's Pride Corp.'s bonds. A trader called the 7 5/8% notes due 2015 unchanged to a little better at 34 bid, 36 offered, versus Friday levels of 33 bid, 35 offered.

Sara Rosenberg contributed to this article.

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