GM debt mixed on Saturn sale news; AIG mostly better on stock sale; Neiman Marcus gains ground

By Stephanie N. Rotondo

Portland, Ore., June 5 - The distressed debt market ended the week on a muted note, traders said, with General Motors Corp. dominating trading in that arena.

GM bonds closed either better or worse - or the same - depending on which source was talking. At any rate, the notes were somewhat active during the session, following news regarding the sale of its Saturn brand.

Meanwhile, American International Group Inc.'s debt firmed on news that the company had sold the majority of its stake in Transatlantic Holdings Inc. The sale is part of AIG's effort to raise funds to repay government bailout funds.

Just one day after posting weak monthly sales numbers, Neiman Marcus Group Inc.'s were seen heading for higher ground. The retailer is slated to release its quarterly report next week.

GM mixed on Saturn news

General Motors' bonds ended the week softer, or better, or unchanged - depending on whom you asked.

One trader saw the bonds holding steady, the 8¼% notes due 2023 at 11 and the 8.8% notes due 2021 at 10.5. About $15 million and $10 million changed hands, respectively.

Another market player called the bonds unchanged to slightly firmer, the 7.2% notes due 2011 and the benchmark 8 3/8% notes due 2033 at 10.25 bid, 11.25 offered.

One other trader, however, saw the notes drifting lower at "+/- 11."

The movement in the bankrupt carmaker's debt came after it was announced that GM would sell off its Saturn unit to Penske Automotive Group. The tentative deal would allow more than 350 Saturn dealerships to stay open, saving about 13,000 jobs.

"This is the combination of two iconic teams: Saturn and Penske," said Saturn general manager Jill Lajdziak in a prepared statement. "GM had the vision to create Saturn and has the desire to see it succeed in the future."

"Saturn has a passionate customer base and outstanding dealer network," added Roger Penske, chairman of Penske Automotive Group. "For nearly 20 years Saturn has focused on treating the customer right. We share that philosophy, and we want to build on those strengths."

"There has been a groundswell of support for Saturn, with our retailers and owners urging us to save the brand," said Lajdziak. "We heard their call loud and clear, and it inspired us as we worked to secure Saturn's future."

No price has been disclosed, but should the deal be completed, it is expected to close in the third quarter of this year.

AIG mostly better

American International Group's paper headed upward after the company sold off a portion of its stake in reinsurer Transatlantic Holdings Inc.

A trader said $20 million of both the 5 3/8% notes due 2012 and the 6.9% notes due 2017 traded. He placed the former in the 64 context and the latter at 59 bid, 60 offered.

Another market source saw the bonds gaining 1 to 3 points on the day, the 5.2% notes due 2011 at 65 bid, 66 offered and the 5.85% notes due 2013 at 62 bid, 63 offered.

AIG sold 26 million of its shares of Transatlantic at $38 per share, a 7.3% discount to the closing price as of Thursday. Before the sale, AIG held about 39 million shares in the company.

AIG held the sale as a way to raise funds to repay the government. The insurance giant received more than $180 billion in federal bailout funds since September 2008.

The company has also been trying to offload certain assets in an effort to reorganize. But some of those plans have been put on hold as the value of some assets has eroded at a hefty rate.

Elsewhere in the world of finance, First Data Corp.'s 9 5/8% notes due 2915 were "somewhat active, maybe a smidge better" around 73, a trader said.

Capmark Financial Group Inc.'s bonds were seen weakening, the floating-rate notes due 2010 at a low of 47 and the 7 7/8% notes due 2012 and the 8.3% notes due 2017 at 26 bid, 27 offered. A trader called the floaters off by 7 to 8 points, while the other issues were down just a couple points.

On Friday, it was announced that United Kingdom-based Capita Group had purchased Capmark's European loan administration, asset management administration and commercial mortgage backed securities administration services for £10 million in cash.

Neiman notes gain ground

Retailer Neiman Marcus saw its bonds moving higher despite posting poor sales results for May on Thursday.

A trader said the 10 3/8% notes due 2015 were "actually a couple points better" around 60, while another called the issue 3 points firmer at 60.5 bid.

For the month of May, Dallas-based Neiman saw revenues fall 21.5% to $246 million, compared with $313 million the year before.

Same store sales were 23.3% weaker at $240 million.

Neiman Marcus will release its third-quarter results on June 10. A conference call is scheduled for 10 a.m. ET.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.