AIG bonds gain after posting narrower loss; Neiman slips on sales; Avis loan drives higher again

By Stephanie N. Rotondo

Portland, Ore., May 8 - American International Group Inc.'s bonds continued to gain ground Friday following the company's earnings release late Thursday.

The bonds had moved up ahead of the report, despite expectations that the insurer would post a loss somewhere around $5 billion. The actual loss came in under that mark, making it the narrowest of losses the company has reported in the last six quarters.

In the world of retail, Neiman Marcus Group Inc.'s bonds fell as much as 4 points during the final trading session. The movement came after the company reported a 25% decline in April sales on Thursday.

Among distressed bank debt issues, Avis Budget Group Inc.'s term loan continued to gain ground. The car rental company's term loan began moving up on Thursday after posting better-than-expected earnings.

AIG gains after narrower loss

American International Group's bonds headed higher in response to the company's quarterly results, which were put out late Thursday, traders reported.

A trader saw the 6.9% notes due 2017 head up nearly 3 points to close at 54.75, on $14 million traded. Another source quoted the 4¼% notes due 2013 at 50 bid, 51 offered, up 3 to 4 points on the day.

At another desk, a trader said the longer issues, such as the 5.4% notes due 2015, ended in the mid-50s, which he called "a little better."

AIG reported a first-quarter loss of $4.35 billion. That was the narrowest of the losses the insurer has posted over the last six reporting sessions. For those six quarters, AIG's loss comes to nearly $109 billion.

"AIG's first quarter 2009 results reflect our efforts, with the ongoing support of the Federal Reserve and the U.S. Treasury, to execute on our plans which were designed to maximize the value of our core businesses and repay U.S. taxpayers," said AIG Chairman and Chief Executive Officer Edward M. Liddy in a press release. "In addition, we are making progress on winding down AIGFP. As of March 31, 2009 its portfolio had a notional value of approximately $1.5 trillion, down from approximately $2.7 trillion at December 31, 2007.

"Importantly, we are moving forward with our efforts to position our strong insurance companies as discrete businesses, for the benefit of all stakeholders, including policyholders, employees and distribution partners," he continued. "In addition, since year-end, we have closed a number of transactions and reached several asset sales agreements, despite a very challenging market environment. On April 16, we announced the sale of our U.S. personal auto business, representing our largest asset transaction to date. Several other transactions are under discussion, and we continue to evaluate how best to assure the continued strength and success of all of AIG's businesses."

Neiman slips on sales

Neiman Marcus Group bonds were seen falling as much as 4 points during the session. The declines came just one day after the company reported its April sales.

A trader placed the high-end retailer's 10 3/8% notes due 2015 at 56, down 2.5 points. Another source, however, deemed the issue down 4 points at 56 bid.

"They were kind of quiet today," said another trader. "They were maybe a smidge weaker, maybe there is some profit taking going on here at the end of the week."

On Thursday, the Dallas-based company reported a 25.1% decline in same-store sales for the month of April. Broken down, Neiman Marcus store sales declined 27.1%, Bergdorf Goodman fell 27.4% and Neiman Marcus Direct saw a 14.3% decline.

Elsewhere in the sector, retail names ended the session rather scattered, despite overall April sales showing signs of improvement.

"It looks like retailers got beat up a little," a trader said.

Burlington Coat Factory Warehouse Corp.'s 11 1/8% notes due 2015 were seen "trading up" to 75, according to one trader. Another trader also placed the issue in that range, calling the paper up 2 points.

Michaels Stores Inc.'s 10% notes due 2014 were either down or unchanged - depending on whom you asked - at 70 bid, 71 offered.

After running up in the previous session on what one trader called "decent" April sales, Bon-Ton Stores Inc.'s 10¼% notes due 2014 gave back some gains, closing around 43, according to a trader.

But another trader deemed the debt unchanged at 42 bid, 43 offered.

Avis loan runs up

Avis Budget Group's term loan B was once again seen moving higher in the secondary market as positive sentiment from the company's better-than-expected earnings results remained, according to a trader.

The term loan B was quoted at 60 bid, 63 offered, up from Thursday's closing levels of 59 bid, 62 offered, the trader said. Early in the day Thursday the bank debt had been at this 60 bid, 63 offered level but it had slipped a little lower prior to the close. On Wednesday morning, the B loan was quoted at 50 bid, 52 offered.

Late Wednesday, the company came out with first quarter numbers, including net loss of $45 million, or $0.44 per share, compared with net loss of $12 million, or $0.11 per share, in the same period last year. Analyst estimates on per share net loss had been around $0.63 per share.

Total company EBITDA was negative $9 million, compared with positive $31 million in the first quarter of 2008. Excluding unusual items, EBITDA for the quarter was negative $3 million.

Avis is a Parsippany, N.J.-based provider of vehicle rental services.

Distressed loans, bonds firm

Stressed/distressed loans, including Dollar Thrifty Automotive Group Inc., Chrysler Financial Services LLC, R.H. Donnelley Corp. and Dex Media West, appeared to find a firm tone in trading on better buyers, according to a trader.

Dollar Thrifty, a Tulsa, Okla.-based renter and leaser of vehicles, saw its revolver quoted at 33 bid, up from 31 bid on Thursday, the trader said.

Chrysler Financial, a provider of financial services for vehicles, saw its first-lien term loan quoted at 81 bid, 82 offered, up from 80 bid, 81 offered.

R.H. Donnelley, a Cary, N.C.-based Yellow Pages and online local commercial search company, saw its term loan quoted at 72½ bid, 74½ offered, up from 71 bid, 73 offered.

And, Dex Media West, a Cary, N.C.-based publisher of Yellow Pages and White Pages directories, saw its term loan quoted at 73½ bid, 75½ offered up from 72 bid, 74 offered, the trader continued.

"Think there was further interest in distressed loans. Buyers out there don't want to miss the boat. Thought switched from the world is ending to we might actually have a survivable economy when we're done," the trader added.

In distressed bond land, First Data Corp.'s 9 7/8% notes due 2015 remained active, closing a tad higher at 71.

Charter Communications Inc.'s 10¼% notes due 2010 "continued to run up," a trader said, ending around 96.

A trader saw Park-Ohio Holdings Corp.'s 8 3.8% notes due 2015 at 50 bid, "and looking for an offer." That was well up from recent levels in the lower 30s, which the Cleveland-based logistics supply-chain company's bonds held until they began moving up, on no news, but rather on investor enthusiasm.

At another desk, a market source was more restrained, seeing the bonds instead in the mid-40s.

Energy operator Delta Petroleum Corp.'s 7% notes due 2015 gained nearly 3 points on the session and were seen going home at the 40 level.

A trader said that Sinclair Broadcast Group Inc.'s 8% notes due 2012 were trading around 64.5 bid, when "a week or two ago, before earnings, you couldn't give them away" at 53 to 53.5.

Sara Rosenberg and Paul Deckelman contributed to this article.

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