Visteon stays active, unmoved post-earnings; Nortel notes lose ground; CIT Group action thins

By Stephanie N. Rotondo

Portland, Ore., Oct. 28 - The distressed debt market "definitely felt weaker" during Wednesday trading, according to one trader. Among the day's active issues, bonds either ended down or, at best, unchanged.

Visteon Corp., for example, saw its bonds holding their ground, despite improved third quarter results. Still, sources said the name was one of the more active issues of the day.

Elsewhere, Nortel Networks Corp. - another active credit - ended lower on the day, with traders call the 10¾% notes due 2016 down as much as 2 points. While there was fresh news out on the company, one source did not see how that could have caused the losses.

After making headlines every day this week - and nearly every day last week - trading in CIT Group Inc. might be quieting down, traders speculated. Volume was rather thin in the name and the bonds finished the day relatively unchanged.

Visteon active post-earnings

Visteon's bonds were "kind of busy," a trader said, after the company released its third-quarter results.

The trader quoted the 7% notes due 2014 at 28 bid, 29 offered, which he said was up from levels around 27, but "not really that much changed, honestly, at least for the week."

Another market source saw the 7% notes at 27 bid, 28 offered, also unchanged. The 8¼% notes due 2010 were meanwhile "maybe down slightly" at 27 bid, 28 offered.

For the third quarter, the Van Buren Township, Mich.-based auto parts supplier reported a net loss of $38 million, or 29 cents per share, compared to a loss of $188 million, or $1.45 per share, for the same quarter of 2008.

Adjusted EBITDA came to $125 million, versus just $5 million the year before.

Total sales for the quarter were $1.73 billion. Total product sales came to $1.67 billion. Of the product sales, both Ford Motor Co. and Hyundai-Kia accounted for 27% each.

The company ended the quarter with a cash balance of $814 million.

"Despite the difficult operating environment, our third-quarter results reflect the continued efforts of our employees to build a global framework for business success which is focused on serving our customers with innovative products and technologies," said Donald J. Stebbins, chairman and chief executive officer, in the earnings release.

"While we believe the global auto industry is recovering from historically low levels of production, there remain challenges as the industry stabilizes."

Elsewhere in the autosphere, General Motors Corp.'s 7.20% notes due 2011 were seen unchanged around 14.25.

On Wednesday, news outlets reported that the struggling U.S. automaker was on track to see an increase in sales, the first time in 21 months. Official sales results will be released next week.

Nortel notes lose ground

Nortel Networks' 10¾% notes due 2016 were among the day's more active issues, according to traders.

One trader pegged the paper at 57.5 bid, 58.5 offered, "down a couple." Another saw the issue at 57 bid, 58 offered, down 2 points on the day.

But another trader said the bonds were down just "a point and change" around "58-ish."

Nortel won court approval Wednesday to sell certain assets pertaining to its development of next-generation packet core network components. The unit will be sold for $10 million to Hitachi Ltd.

The deal is expected to close by year's end.

Still, "I don't know why they would be down on that [news]," a trader said.

But that wasn't the only news of the day for Nortel. The Canadian technology company said it planned to postpone another auction - this one for its GSM/GSM-R business - to Nov. 20 from Nov. 9, as it works to complete other asset sales and divesting activities.

CIT action quiets down

CIT Group's notes saw some action, but "not as much as you might think," a trader said.

The trader said the 7 5/8% notes due 2012 were the credit's most active issue - but only on about $10 million traded - trading around 65.

"That's about the same as they have been, maybe slightly better than yesterday," he said.

At another desk, a trader agreed that there was "not quite as much activity" in CIT. He speculated that any action going on was simply people moving things around ahead of the tender offer deadline on Thursday.

He noted that long-dated paper remained in the mid-60s.

The New York-based lender announced that it had expanded its existing $3 billion senior secured credit facility by $4.5 billion. The new portion of the loan - which was provided by a group including some CIT bondholders - will be secured by substantially the same assets as the original tranche, the company said in a press release. The facility comes due January 2012, but can be extended for another year.

"We believe this secured financing will serve the best interests of all stakeholders and will allow us to better position CIT for the future," said Jeffrey M. Peek, chairman and CEO, in the statement. "This expanded credit facility will allow us to continue to serve our existing small business and middle market customers as we advance our restructuring plan."

CIT also continued to fan the flame that burns between the company and billionaire investor Carl Icahn. In the release, CIT said it had received a commitment letter from Icahn for the entire $4.5 billion loan, but elected not to go that route.

"Although Mr. Icahn and his advisors had been in discussions with the company for several days and were fully aware of CIT's deadline, they provided the company less than one hour to review and accept his commitment letter," the release said.

"Additionally, despite several requests from the company for information and multiple deadline extensions, the company has yet to receive a signed credit agreement and evidence of Mr. Icahn's ability to fund the commitment.

"As a result of the lack of evidence that Mr. Icahn has arranged sufficient funding at this time, CIT's board of directors determined that the best interests of the company and its stakeholders would be served by proceeding with the credit facility provided by a diverse group of lenders."

Among other names in the financial realm, First Data Corp.'s 9 7/8% notes due 2015 lost "another point," a trader said to around 92. He added that the paper had lost about 5 points in the last eight days.

ResCap rebounds on GMAC news

Residential Capital LLC's 9 5/8% notes due 2015 regained some ground it had lost after Capmark Financial Group Inc. filed for Chapter 11 protections, according to a trader.

The trader explained that the initial losses earlier in the week were due the ResCap and Capmark "being in similar spaces." Wednesday's gains were meanwhile attributed to news that parent company GMAC LLC might be receiving a third government capital infusion.

The trader placed the issue at 73 bid, 75 offered, up from 69 bid, 70 offered.

Neiman takes a hit

With the market feeling weaker on the day, Neiman Marcus Group Inc.'s bonds were "hit a good bit," a trader said.

The trader called both the 9% notes and the 10 3/8% notes due 2015 down 4 points around "87-ish." Another source saw the 10 3/8% notes declining nearly 3 points to 88.75 bid.

There was no fresh news to explain the movement in the Dallas-based retailer's bonds.

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