Nortel improves on sale plans; Hawker higher on upgrade; ILFC better, American General worse

By Stephanie N. Rotondo

Portland, Ore., Dec. 23 - The distressed debt market was in wind down mode Wednesday, as market players prepared for a short session Thursday.

Still, some things managed to get done and there was some strength in the marketplace.

Nortel Networks Corp., for example, moved up in trading, according to sources. The gains came as the company announced it was selling yet another of its units - a practice the company has used quite a bit while it has been in bankruptcy.

Meanwhile, Moody's Investors Service raised its liquidity rating on Hawker Beechcraft Acquisition Co. LLC. In response, the company's bonds headed upward.

It was a mixed bag for units of American International Group Inc. during Wednesday's session. Its International Lease Finance Corp. division saw its bonds recouping some losses incurred over the week. But its American General Finance Corp. paper dipped following a downgrade into junk territory.

The bond market will close early on Thursday and will be closed Friday in observance of the Christmas holidays.

Nortel improves on sale news

Nortel Networks' bonds ended "a little better," a trader said, following news that company was looking to divest yet another of its units.

The trader called the 10¾% notes due 2016 "up a good point," trading with a 63 handle. Another trader pegged the issue around 63.5, up 1.5 points on the day.

The Toronto-based company said it had entered into an agreement with Genband Inc. to sell nearly all of its Carrier Voice over Internet Protocol and Application Solutions business. The stalking horse bid is $282 million.

Nortel Networks is a telecommunications company.

Hawker gains on upgrade

Hawker Beechcraft Acquisition Co.'s 8½% notes due 2015 improved some on the back of an upgrade from Moody's Investors Service.

A trader said the notes "looked a little better" around the 70 mark. Another trader echoed that level, calling that up from levels at 65 bid, 66 offered last week.

Moody's lifted its speculative grade liquidity rating on the Wichita, Kan.-based aircraft manufacturer to SGL-3 from SGL-4. The agency said the upgrade was a result of the closing of an incremental term loan in November.

ILFC better, American General worse

International Lease Finance, the aircraft leasing division of American International Group Inc., saw its bonds "rebounding some" after "being pretty much down all week," according to a trader.

The trader said the 5.30% notes due 2012 were "probably a smidge better" around 85.5, though he added that the notes were "not all that active."

The bonds had begun to drop Monday following a rating downgrade Friday.

Meanwhile, Moody's dropped its rating on another AIG unit, American General Finance. Like the ILFC paper, this resulted in some losses in the bonds.

The trader said the 6½% and 6.90% notes due 2017 were "down a little bit" at 70 bid, 70.5 offered.

Another trader said that the New York-based insurer's bonds, like its 5.90% notes, were down by several points following a Moody's Investors Service downgrade of the AIG consumer lending subsidiary's ratings to B2 from Baa3 previously, on fears the parent company may withdraw support for American General within the next year. He quoted the bonds as trading between 82 bid and 83, with the last trade at 81.5.

Elsewhere in the financial world, CIT Group Inc. was "on the quiet side," a trader said. However, shorter-dated paper, such as the 7% notes due 2013, continued to move up, he said, placing the issue at 93.5. But longer maturities, such as the 7% notes due 2017, were unchanged at 86.5.

Visteon still surging

Visteon Corp.'s 7% notes due 2014 remained active, a trader said, as they had been in the previous session.

The trader also saw the bonds gaining more ground, ending around 26, compared with 22 bid, 23 offered on Tuesday.

There was no news on the Van Buren Township, Mich.-based automotive parts supplier to explain the momentum.

Paul Deckelman contributed to this article.

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