First Data dips on numbers; RHD mixed on forbearance; GM drives sector higher; Rite Aid better

By Stephanie N. Rotondo and Sara Rosenberg

Portland, Ore., May 15 - First Data Corp.'s bonds were the day's most active trader Friday after the company posted weak quarterly results.

Market sources saw the company's bonds dropping 2 to 4 points on the day following the earnings release.

Meanwhile, R.H. Donnelley Corp.'s debt ended mixed following news that the company had obtained a forbearance agreement on missed interest payments. Some sources saw the bonds gaining slightly, but others saw the notes falling as much as 3 points.

In the autosphere, talk of a par paydown on its bank loans pushed General Motors Corp.'s bank debt higher. The chatter might also have caused the rest of the sector to end positive, traders speculated.

After losing weight over the last few sessions, Rite Aid Corp.'s bonds were once again moving upward. A trader opined that refinancing buzz was behind the 5-point increase.

First Data dips on numbers

First Data's capital structure turned downward after the company posted what one trader called "bad" numbers.

The trader said the 9 7/8% notes due 2015 were the day's most active trader, with "$40 million plus" changing hands. He saw the notes dropping 3 points to 63.5.

Other traders deemed the debt down anywhere from 2 to 4 points on the day at 63 bid, 64 offered, from 66 bid, 67 offered previously.

The company's term loan B-2 also fell after the company came out with earnings that showed an increase in net loss, and a decrease in revenues and EBITDA, according to a trader.

The term loan B-2 was quoted at 70¾ bid, 71¼ offered, down from Thursday's levels of 72½ bid, 73½ offered, the trader said.

For the first quarter, First Data saw a net loss of $231.3 million, compared with a net loss of $221.7 million in the prior year's first quarter.

Revenues for the quarter were $2.076 billion, down 2% from $2.127 billion in the comparable period last year.

And, EBITDA for the quarter was $490.5 million, down 15% from $574.7 million in the first quarter of 2008.

"Our revenue base held steady in the quarter as we added new merchant and bank customers," said Michael Capellas, chairman and chief executive officer, in a press release. "We will continue to invest in new product development to fuel long-term growth while driving cost efficiencies to sustain profitability."

First Data is a Greenwood Village, Colo.-based provider of electronic commerce and payment services.

Elsewhere in the world of financials, American International Group Inc.'s bonds closed unchanged to up slightly, despite a downgrade from Fitch Ratings.

A trader said there was "nothing crazy" in the name, placing the 8.45% notes due 2009 at 92.5 - unchanged - and the 6¼% notes due 2037 a point better around 23.

Fitch downgraded the insurer to BBB from A. Despite the seemingly investment-grade rating, the company's debt has been trading on distressed desks since the U.S. government had to step in with emergency funding to keep the giant afloat.

Donnelley mixed on forbearance

Traders gave mixed reviews of R.H. Donnelley's bonds after the company announced a forbearance agreement.

One trader saw the 6 7/8% notes due 2013 gain a quarter of a point to close around 5 1/8.

Another said the 8 7/8% notes due 2016 moved up 1.5 points to around 6 from 4.5. But the 9 7/8% notes due 2013 dropped about a point to 20 from 21.

"It was kind of weird," the trader said of the movement in the name.

At another desk, a trader called the phonebook publisher's bonds "off 3 points across the board," the 9 7/8% notes at 21 bid, 22 offered, the 8 7/8% notes at 5 bid, 6 offered and the 9% notes due 2013 linked to Dex Media Inc. at 13 bid, 15 offered.

The Cary, N.C.-based company said Friday that it had entered into a forbearance agreement with bondholders and bank lenders on interest payments that came due April 15. The 30-day grace period expired on Friday, thus causing the need for the agreement.

The company also secured a forbearance on an interest payment due Friday on four series of notes, including its 11¾% notes due 2014 and 9% notes due 2013.

R.H. Donnelley has until May 28 to secure another forbearance or to cure the potential default.

Last week, the company reported a net loss of $401.2 million for the quarter ending March 31. The represented an improvement over the $1.6 billion net loss reported in the first quarter of 2008.

Revenues for the quarter dropped 11% to $602 million from $674.7 million the year before. Advertising sales declined 17% to $598 million.

GM drives sector higher

In the world of automakers, General Motors' bank debt was stronger by another few points during the trading session with talk being that some investors are thinking they might be facing a par paydown in the not so distant future, according to traders.

The Detroit-based automotive company's term loan was quoted at 70 bid, 71 offered, up from 66 bid, 68 offered, and the revolver was quoted at 70 bid, 71 offered, up from the low-60 context, one trader said.

Meanwhile, a second trader had the term loan at 70 bid, 71½ offered, up from 66 bid, 68 offered, and the revolver at 70 bid, 72 offered, up from 63½ bid, 65½ offered.

By comparison, on Wednesday, the term loan was quoted around the 58½ bid, 61 offered area and the revolver was quoted in the 54 bid, 56 offered area.

"Revolver used to trade around two points back from the term loan. Now we see them on top of each other," the first trader remarked.

According to one trader, General Motors has been on the rise since Thursday afternoon after news leaked out that there was a lawyer call with some group of lenders to talk about what's going to happen to the term loan and the revolver if the company files for bankruptcy.

The trader went on to say that one of the scenarios discussed on the call was that the government might take the term loan and revolver out at par.

As a result of this potential par repayment, the term loan and revolver have been rallying, and the revolver is now trading in line with the term loan, the trader added.

Whether General Motors is going to file for bankruptcy is expected to be revealed within the next few weeks.

In April, the company launched offerings to exchange 225 shares of its common stock for $27 billion of its unsecured public notes.

If, prior to June 1, the company does not receive enough tenders of notes to consummate the exchange offers, it expects to seek relief under the U.S. Bankruptcy Code.

This relief may include seeking bankruptcy court approval for the sale of most or substantially all assets to a new operating company and a subsequent liquidation of the remaining assets, pursuing a plan of reorganization, or seeking another form of bankruptcy relief.

In an S-4/A filed with the Securities and Exchange Commission late Wednesday, General Motors said that it currently believes that if it pursues one of the alternatives, a sale would be the most likely.

Meanwhile, Ford Motor Co.'s term loan saw an improvement on Friday as well, with some saying that it was likely just following General Motors since there was no news specific to the credit.

One trader quoted the term loan at 65 bid, 67 offered, up from 62¾ bid, 63¾ offered.

A second trader had the term loan quoted at 67 bid, 68 offered, up from 65 bid, 66 offered, and the revolver quoted at 58 bid, 60 offered, up from 54 bid, 55 offered.

Ford is a Dearborn, Mich.-based automotive company.

Also, Chrysler Financial Services LLC's first-lien term loan and revolver also saw a noticeable gain during the trading session, according to a trader.

The first-lien term loan was quoted at 85 bid, 86 offered, up from 81½ bid, 82½ offered, and the revolver was quoted at 84 bid, 85 offered, up from 79 bid, 80 offered, the trader said.

On Friday, the company held a lender call to discuss financial results.

"Traded up before, during and after the call," the trader remarked. "Could be moving with GM and Ford, or on its own because of this call."

Chrysler Financial is a provider of financial services for vehicles.

Rite Aid recoups losses

Rite Aid's bonds regained some ground it lost on Friday, gaining as much as 5 points on the day on what one trader called "refinancing chatter."

The trader called the 9½% notes due 2017 and the 9 3/8% notes due 2015 4 to 5 points better at 59 bid, 60 offered.

The trader said that there was news that the company was considering refinancing its revolving credit facilities that mature next year, accounting for the gains.

But another trader said he had no idea why the drugstore chain's debt has been trading so actively. He placed the 9½% notes around 60, compared with 55 on Thursday.

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