Visteon jumps on full-year profit; Smurfit-Stone steady on CFO exit; AIG bonds slip on numbers

By Stephanie N. Rotondo

Portland, Ore., Feb. 26 - Snowy weather in the New York area resulted in a lackluster trading day, at least as far as volumes were concerned, traders reported Friday.

But despite the lower turnover, there were some major price movers during the day's session.

Visteon Inc. saw its bonds jumping 15 to 18 points, following the company's release of its last quarterly results of 2009. The numbers showed the company as reporting its first-ever annual profit.

Meanwhile, Smurfit-Stone Container Corp.'s bonds and bank debt were steady in trading. The company had announced a top executive departure Friday.

American International Group Inc. reported earnings, which one market source deemed "crummy." The disappointing results put pressure on the company's debt, with the bonds ending 1 to 1½ points lower.

And Blockbuster Inc.'s debt closed the day about unchanged, though the bonds continued to be among the most active credits.

Visteon jumps on full-year profit

Visteon paper was "up big," a trader said, following the release of the company's fourth-quarter and full-year results.

The trader called the 7% notes due 2014 and the 8¼% notes coming due Aug. 1 up "close to 18 points" on the day, ending around 70.

Another trader deemed the debt up 15 to 18 points, depending in the issue. He saw the 7% notes quoted at 66 bid, 70 offered, compared to the last trades around 52. The 8¼% notes meantime closed around 66, he said.

"I think a lot of people expect parts suppliers to do well with all this Toyota recall stuff going on," he noted.

For the fourth-quarter, the Van Buren Township, Mich.-based company saw sales of $2.03 billion, versus sales of $1.65 billion the year before. Net income came to $276 million, or $2.12 per share. That compared to a net loss of $346 million, or $2.67 per share, for the fourth quarter of 2008.

For the year, Visteon reported its first-ever yearly profit, with net income coming to $128 million, or 98 cents per share, on sales of $6.68 billion. In 2008, the company reported a full-year loss of $681 million, or $5.26 per share, on sales of $9.54 billion.

"Our restructuring, ongoing cost-reduction initiatives and ability to keep overhead costs aligned with reduced sales helped drive significant year-over-year improvements in cash flow and earnings, despite significantly lower vehicle production volumes and challenging industry conditions," said Donald J. Stebbins, chairman and chief executive officer, in the earnings release.

"Through many aggressive and very difficult actions, Visteon's overhead cost structure was essentially flat as a percentage of sales in 2009, despite a nearly 30% decline in product sales. We are focused on providing a competitive cost structure for our customers and will continue to aggressively look for opportunities in this area."

Also, the company said that it won $562 million of new business in 2009, along with $593 million in "gross re-win business."

As of Dec. 31, Visteon had a cash balance of $1.1 billion.

Elsewhere in the autosphere, a trader said that General Motors Corp.'s benchmark 8 3/8% notes due 2033 "moved up" to a recent high around 31.

Smurfit steady on CFO exit

Smurfit-Stone Container's debt held its ground during Friday trading, even after the company revealed that its senior vice president and chief financial officer, John Murphy, has resigned.

The Chicago-based manufacturer of paperboard and paper-based packaging said on Thursday evening that Murphy was leaving, effective immediately, to pursue other interests.

"We thank John for serving in this transitional CFO role and wish him the best of luck in his future endeavors. He was instrumental in arranging our chapter 11 exit financing and has provided important leadership through the process," said Patrick J. Moore, chairman and chief executive officer, in a news release.

On Friday, the term loan was quoted by one trader at 99¼ bid, par offered and by a second trader in the mid-99s bid throughout the day, with both calling the paper flat when compared to Thursday's levels.

"My read is that the heavy lifting of Chapter 11 is done and now it will be just mundane paper company CFO work. The [press release] used the word 'transitional' about the leaving CFO, so maybe he was brought in specifically for Chapter 11 expertise," the second trader added.

In the bonds, a trader said the bonds - such as the 8% notes due 2017 - "might be up a little bit" at 82 bid, 83 offered, versus 81½ bid, 82 offered on Thursday.

Another source called the 8¼% notes due 2012 a point better at 82¾ bid.

AIG slips post-numbers

New York-based insurance giant American International Group saw its bonds fall 1 to 1½ points after it reported an $8.9 billion, or $65.51 per share, net loss for the fourth quarter.

A trader said the bonds linked to subsidiary American General Finance Corp. - like the 5.90% notes due 2012 - "traded off about a point" to 86 bid, 86 ½ offered.

However, the 6 3/8% notes due 2013 linked to AIG's aircraft leasing unit, International Lease Finance Corp., were unchanged around 88.

At another desk, a trader said the "larger issues" were off "a good point." He saw the 5.90% notes at 86 bid, 87 offered, down from levels around 87½ on Thursday. He also saw the 5 3/8% notes due 2012 drifting down to 841/2, versus opening levels around 861/2.

"I think the numbers were kind of crummy," the trader said.

The company said that it was continuing to "address the funding needs and are exploring strategic restructuring opportunities for International Lease Finance and American General Finance."

Blockbuster still active

Blockbuster bonds "continued to be pretty active," a trader said.

The trader said the 9% notes due 2012 traded up to 20 before coming back to end around 19½ bid, 20 offered.

Another trader pegged the issue "kind of wide" and about unchanged at 18 bid, 20 offered, noting that the last trades were with a 19 handle.

"I don't know if guys are resetting positions or what," he said.

Blockbuster is a Dallas-based movie rental chain.

Sara Rosenberg contributed to this article

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