American Axle debt heads higher; Clear Channel talks new issue, bonds gain; broad market firms

By Stephanie N. Rotondo

Portland, Ore., Dec. 7 - The distressed debt market ended firm Monday, according to sources, but some were disappointed with the total volume.

A trader said, "We only got to $1 billion and given how much new issues there's been, that's kind of slack."

"What I really get a sense of is everybody is in cleanup mode," he added. Accounts don't want to do anything "fancy," but they don't want to miss anything either. As such, he expects that the remainder of the year will be similar to Monday's session, with some "opportunistic buying" interspersed.

Of the day's goings-on, American Axle & Manufacturing Inc.'s debt got a boost as the company announced it had amended its credit facility. And the company is also reportedly planning a new issue.

Also busy were Clear Channel Communications Inc.'s notes. According to several news reports - citing sources familiar with the matter - the company is in fact planning a new issue, giving credence to market chatter on the same topic.

American Axle debt heads up

American Axle & Manufacturing's debt moved higher in trading, following news of a new issue and an amendment to its credit facility.

A trader called the bonds "a couple points better," the 7 7/8% notes due 2017 around 81 and the 5¼% notes due 2014 around 87.

Another trader deemed the paper "pretty active," seeing the 7 7/8% notes due trade in a range of 80 to 83. He called that 2 to 3 points firmer on the day.

"That paper has been climbing up," said another trader, quoting the 7 7/8% notes at 81 bid, 82 offered and placing the 5¼% notes around "86-ish."

And American Axle's revolver gained some ground on Monday after the company said that it amended its credit facility and will repay some borrowings, according to a trader.

The revolver was quoted at 97½ bid, 99½ offered, up from 95¾ bid, 96¾ offered, the trader said. The term loan, meanwhile, was unchanged at 99 bid, par offered.

On Friday, the company completed an amendment to its revolving credit facility that extends the maturity of approximately $243 million of the commitments to June 2013.

The effectiveness of the amendment is subject to the satisfaction of certain conditions, including the closing of a $400 million senior secured notes offering, which will be used to repay all amounts outstanding under an amended and restated credit facility and some revolver borrowings.

In connection with these transactions, the size of the revolver is being reduced.

American Axle is a Detroit-based producer of driveline and drivetrain systems and related components and chassis modules for the automotive industry.

Clear Channel talking new issue

Clear Channel Communications' bonds remained active and resumed their upward ascent, as news reports indicated the company was in talks to issue up to $2.5 billion in new debt.

A trader said about $40 million of the 11% notes due 2016 traded "marginally" better at 61 bid, 61.5 offered.

Another trader saw the credit "trading a decent amount" between 61.5 and 63.5. That trader called the notes up 2 to 3 points from Friday.

Clear Channel has been on a run of late, but with little fresh news, it was not clear what had been driving it. Some sources speculated that the San Antonio-based media company was considering a new debt issue, thus the increased interest in the name.

According to news reports, Clear Channel is in talks with lenders about the new issue. Clear Channel could use the notes to cover a $2.5 billion intercompany note due to its parent company in August.

The deal is expected to come within the next two weeks.

Broad market firms

Among other distressed issues, Smurfit-Stone Container Corp.'s 8 3/8% notes due 2012 ended "a little better," according to a trader, around 86, on about $4 million traded.

Despite news that it had filed its reorganization plan - which included a plan to issue another $105 million in notes - Aventine Renewable Energy Holdings Inc.'s bonds were pretty quiet, a trader said.

The trader said he saw a 76 bid, with no offers. Still, the bonds last traded in decent size around 71, he added.

"They haven't traded for awhile," he said. "People are looking for them now."

CIT Group Inc.'s senior unsecured paper moved up 2 to 3 points to 74 bid, 75 offered, a trader said. When asked why, he remarked that there were "some headlines talking about their plan." Basically, he said, the plan has very few objections to it, "clearing the way and they can emerge" from bankruptcy on schedule.

Sara Rosenberg contribute to this article.

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