Ford active, weaker; Lear mixed on earnings; Nova short paper dives; Freescale lower ahead of numbers

By Stephanie N. Rotondo

Portland, Ore., Jan. 29 - It was a day of earnings Thursday, as Ford Motor Co., Lear Corp., Nova Chemicals Corp. and Freescale Semiconductor Inc. released fourth-quarter results.

As expected, Ford posted a sizable loss for the quarter, not to mention the year. But even as the company insisted it would not have to look to the government for bailout funds, investors pressured the company's debt.

Lear's numbers were not so good either, given that its top two customers are Ford and General Motors Corp. But traders gave mixed reports on how the automotive parts supplier's bonds fared during the session.

Meanwhile, Nova Chemicals posted a loss, which was attributed to weak sales. As a result, Nova's upcoming maturity, the 7.4% notes due in April, lost at least 9 points on the day.

Freescale put out its numbers and held a conference call after the market closed. Before the report came out, traders said there was light activity in the name, though its various issues were deemed mostly lower.

Overall, traders called the distressed bond arena unchanged to weaker. One trader remarked that volumes were "average for a mid- to end-of-the-week day."

Ford debt active, weaker

Ford Motor's loss in the fourth quarter resulted in some of its bond issues trading rather actively, though traders saw little difference price-wise.

A trader saw Ford's benchmark 7.45% notes due 2031 trade at 22.75, off about half a point on $22 million traded. Another trader quoted that issue at 22 bid, 23 offered, just a quarter-point weaker.

At another desk, the 7.45% notes were deemed "quite active" at 22.5. A source noted that the longer issues were down about half a point to a point across the board, while the shorter 7 3/8% notes due 2009 were "about where they have been" at 89 bid, 9 offered.

"I think [Ford] is out of business," the source quipped.

The Dearborn, Mich.-based carmaker reported a loss of $5.9 billion, or $2.46 per share. Excluding one-time items, the loss decreased to just $1.37 per share, still above analysts' expectations of $1.24 per share.

Including the fourth quarter figures, Ford's loss for the year grew to $14.6 billion, the worst performance in the company's 105-year history.

After reporting its numbers, Ford also said that it was drawing down its revolving credit line, giving it access to more than $10 billion in cash as early as next week. Despite the move, Ford executives have maintained they have no plans to get access to federal bailout funds, like its rivals General Motors Corp. and Chrylser LLC.

In GM's debt, the 8 3/8% notes due 2033 were called unchanged by one trader, with about $8 million changing hands. Another trader pegged that issue at 14 bid, 15 offered, which he called "down a little, but not that much."

GMAC LLC's 6 7/8% notes due 2012 closed at 61.5 bid, 62.5 offered, unchanged on the day.

Lear mixed on quarterly report

Elsewhere in the autosphere, automotive parts supplier Lear saw its fourth quarter swing to a loss. But market sources gave differing views on how that affected the company's bonds.

One trader saw the 8¾% notes due 2016 fall a point to around 19.5. But another saw the 5¾% notes due 2014 gain more than 2 points to close at 26 bid.

The Southfield, Mich.-based company posted a loss of $688.2 million, or $8.91 per share, versus a year ago profit of $27 million, or 34 cents per share. Revenue dropped to $2.6 billion from $3.85 billion the year before.

Lear, like most other parts suppliers, has struggled as its biggest customers GM and Ford have cut production amid weak sales and an economic crisis. With no clue as to how long the current state of the economy would last, the company declined to give forecasts for the year.

Lear also said it was in talks with its lenders to amend its credit agreements, a move aimed at keeping liquidity flowing.

Nova short paper dives

Canadian-based Nova Chemicals saw its fourth-quarter results also affected by the economic downturn, as weak sales resulted in a $214 million loss.

As such, traders reported that the company's shortest paper, the 7.4% notes coming due in April, dropped about 9 points on the day, while its longer issues seemed slightly higher.

A trader placed the 7.4% notes at 74.5, a 9.5-point loss. He added that about $20 million traded, making it one of the more active issues of the day.

Another trader said the bonds "got weaker" throughout the day, opening at 81 bid, 83 offered before falling to 78 bid, 80 offered.

"The company said 'we should be OK unless these things happen,'" he said. "People didn't like it."

Meanwhile, a market source called the 6½% notes due 2012 a point better at 12 bid.

The company's loss came on sales of $1.15 billion, a 36% decline and the biggest drop in sales since the fourth quarter of 2000.

Nova said that it was "in a position to deal with" its upcoming maturity, as well.

Freescale notes lower

Market sources said there was little trading in Freescale Semiconductor's bonds ahead of its post-market close release of its quarterly numbers.

But even in light trading, the bonds were seen mostly weaker.

A trader called the debt off anywhere from half a point to three-quarters of a point, its 8 7/8% notes due 2014 at 21.5, its 9 1/8% notes due 2014 at 12.5 and its 10 1/8% notes due 2016 at 17.

Another source deemed the 8 7/8% notes a quarter-point softer at 22 bid, 23 offered, while its 9 1/8% notes were unchanged around the 13 level. And the 10 1/85 notes were actually called about 3 points better at 21 bid, 21.5 offered.

Minutes after the market closed, Freescale posted its fourth-quarter and full-year results. Net sales for the quarter fell to $940 million from $1.4 billion the quarter before and $1.5 billion in the fourth quarter of 2007. For the year, sales slipped to $5.2 billion from $5.7 billion the previous year.

Freecale's loss jumped to $4.2 billion for the quarter, versus a loss of $595 million in the same quarter of 2007.

"The challenging economic climate significantly impacted our fourth quarter results," Rich Beyer, chairman and chief executive officer, said in a statement. "Despite the current climate, our priorities are clear and achievable. We remain focused on further reducing our break even point while ensuring we execute on our strategic growth initiatives and leverage our market leadership positions."

In the rest of the technology sector, Seagate Technology HDD Holdings' 6.8% notes due 2016 were called softer at 53, down from the mid-50s. Still, a trader said the bonds were "quoted but not really trading."

Broad market mostly flat

Freeport-McMoRan Copper & Gold Inc.'s 8 3/8% notes due 2017 once again garnered the top spot on the day's most active list, a trader said. He saw about $40 million of the bonds change hands around 88 3/8. He called that "flat to off a quarter point."

Harrah's Entertainment Inc.'s 7 7/8% notes due 2010 closed unchanged at 51.5.

Momentive Performance Materials Inc.'s 9¾% notes due 2014 closed "about the same as [Wednesday]," a trader said, at 43.5 bid, 44.5 offered.

The trader also saw U.S. Concrete Inc.'s 8 3/8% notes due 2014 at 56.5.

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