CIT, MGM earn top trading spots; GMAC paper continues to rise; TXU notes power up on earnings

By Stephanie N. Rotondo

Portland, Ore., May 1 - CIT Group Inc. was deemed the Friday's most active name, with MGM Mirage taking the second rung.

CIT's bonds moved up as much as 6 points, traders reported. In MGM, the bonds gave back some gains it had incurred in the previous session. Those increases came as the company announced a new deal with Dubai World.

GMAC LLC's debt continued to move higher, continuing the momentum from Thursday trading when it was learned that now-bankrupt Chrysler LLC's financial arm would merge with the company.

Among the automakers, Ford Motor Co.'s bank debt closed stronger, while General Motors Corp.'s faltered. The activity followed the release of disappointing April sales numbers.

Energy Future Holdings Corp.'s bonds got a boost after the energy provider - more popularly referred to as TXU - reported improved earnings.

CIT, MGM top active list

CIT Group's paper was considered the most active during what traders called an otherwise quiet day.

A trader called the notes up 4 to 6 points, depending on the issue. He saw the 5.65% notes due 2017 at 61, the 7 5/8% notes due 2012 at 66.5 and the 5% notes due 2015 at 61.

There was no news in the name to explain the move, but the bonds made the active list several times over the course of the trading week, each time with no news.

When asked if the bank "stress-test" results had anything to do with the recent activity, the trader said he was not sure, but it was not impossible.

Also active on the day was MGM Mirage's bonds. After running up in the previous session, the notes gave back a little of their gains.

A trader pegged the 6 5/8% notes due 2015 at 54.5. Another trader quoted the issue at 54 bid, 55 offered down from 56 bid, 57 offered.

The bonds ran up in the previous session after the company said it had signed a new deal with its CityCenter joint venture partner, Dubai World. Under the new terms, the $8.5 billion project on the Las Vegas Strip is fully funded. Dubai will also reimburse MGM $135 million that MGM paid lenders without Dubai's help. Dubai also agreed to drop a breach of contract lawsuit it had filed against the casino operator.

"They had been around 50 before the news," a trader said of the company's bonds. "So maybe they had just gotten a little ahead of themselves."

GMAC still moving higher

Market sources said trading in GMAC bonds fell off some, though the paper was still posting gains.

A trader placed the benchmark 8% note due 2031 at 63, a gain of a couple of points, while the 5% notes due 2009 closed likewise better at 95.

"They grind a little higher it seems every day," he said.

Another source saw the 6 7/8% notes due 2012 moving up a whopping 10 points on the day, closing at 75.5 bid.

The financial services company's bonds began heading higher on Thursday, after news that the company would merge with Chrysler's financing arm as part of the automaker's restructuring plan. Investors were seemingly positive about that news, but some still felt GMAC - which has struggled under the weight of its faltering Residential Capital LLC subsidiary - was not out of the woods just yet.

Kathleen Shanley, an analyst with Gimme Credit LLC, said in a note to investors that the company still faces challenges, especially if its former parent company, General Motors Corp., files for bankruptcy. As such, she recommended noteholders sell their stakes in the company.

"GMAC bondholders are enthusiastic about the Obama administration's plan for Chrysler," wrote Shanley. "We would take advantage of the recent rally and sell GMAC debt."

GMAC will release its first quarter results on May 5.

And speaking of GM, a trader said the bonds were relatively unchanged, with the longer issues, such as the benchmark 8 3/8% notes due 2033, at 8 bid, 9 offered and the shorter paper, such as the 7.7% notes due 2016, at 9 bid, 10 offered.

Ford loans up, GM's lower

Ford Motor's term loan was a little stronger on Friday as April sales numbers came out, which although down on a year-over-year basis, weren't that bad compared with last month's results, according to a trader.

The Dearborn, Mich.-based automotive company's was quoted at 63½ bid, 65 offered, up from 63¼ bid, 64¼ offered on Thursday, the trader said.

The company's revolver, meanwhile, was unchanged at 50 bid, 51 offered, the trader added.

For the month of April, Ford's total sales were 134,401, down 31.6% from 196,385 in April 2008. In March total sales were 131,465.

Total truck sales for the month were 77,435, down 33% from 115,593 last year. In March, total truck sales were 78,640.

And, car sales were 52,463, down 28.8% from 73,654 in April 2008. In March, total car sales were 46,467.

On the flip side, GM's bank debt was a little softer on the day as it too announced April numbers, even though, like Ford, it also showed a pretty flat month compared with March but a fairly large drop from last year, according to traders.

The Detroit-based automotive company's term loan was quoted by one trader at 64 bid, 68 offered, and by a second trader at 66½ bid, 68 offered, down from 67 bid, 68½ offered on Thursday.

And, the company's revolver was quoted by the second trader at 54½ bid, 56 offered, down from 55 bid, 57 offered.

For the month of April, General Motors' total sales were 173,007, down 33.7% from 260,922 in April of the previous year. In March, total sales were 156,380.

Total truck sales were 101,232, down 27.7% from 140,098 last year. In March, truck sales were 87,503.

And, total car sales were 71,775, down 40.6% from 120,824 in April 2008. In March, car sales were 68,877.

TXU notes power up

Energy Future Holdings, better known as TXU, saw its bonds moving up slightly after posting improved first quarter results on Friday.

A trader called the debt "kind of active," quoting the 10 7/8% notes due 2017 at 69 bid, 70 offered. That compared with 67 bid, 68 offered previously.

The trader also saw the 10 ¼% notes due 2015 at 57 bid, 58 offered, up from 56 bid, 57 offered.

Another trader also placed the latter issue around 58, deeming it "up a little bit."

The Dallas-based energy provider posted a profit of $42 million for the quarter, versus a net loss of $1.27 billion the year before. Adjusted results saw that profit turn to a loss of $265 million, compared with $243 million in 2008.

The company said the improved results were due to lower natural gas prices.

Broad market mixed

Among other issues in distressed land, Rite Aid Corp.'s 9½% notes due 2017 "drifted back in" to 50.5 bid, 51.5 offered. The notes had previously been on a several-sessions-long rally.

Meanwhile, General Growth Properties Inc.'s 5 3/8% notes due 2013 ended better around 53, according to a trader.

Sara Rosenberg contributed to this article.

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