GM bonds seen busy; gaming gains as Vegas revenues zoom; Blockbuster calm despite Icahn move

By Paul Deckelman and Sara Rosenberg

New York, April 8 - General Motors Corp.'s bonds continued to trade actively on Thursday, around or somewhat below the levels to which the Detroit-based car manufacturer's bonds had fallen on Wednesday after GM reported a more than $4 billion loss for that portion of 2009 between the time it emerged from Chapter 11 and the end of the year. GM rival Ford Motor Co.'s bonds were also seen slightly weaker from Wednesday's levels.

Gaming bonds like MGM Mirage and Harrah's Operating Co. were seen mostly doing better after Nevada gaming authorities released the latest monthly gaming revenue numbers from Las Vegas - showing a sharp improvement in February from the anemic year-earlier results.

The news that savvy billionaire investor Carl Icahn had once again cut his equity holdings in troubled Blockbuster Inc. had surprisingly little impact on the Dallas-based movie-rental company's bonds, which had gotten a solid boost on Wednesday on the news that Blockbuster had cut deals with several major movie studios that will let it have earlier access to major motion pictures.

A trader noted continued strength in Tronox Worldwide LLC's bonds - which now trade at levels well above par despite the fact that the chemical pigments maker is still restructuring through the courts.

A trader said that with continued spread tightening since the beginning of the year, so many distressed issues are trading at very un-distressed-like levels up to and in a few cases, even above par, so "the distressed stuff is a lot less distressed." He agreed with the proposition that it's increasingly difficult to tell actual distressed stuff from non-distressed high yield, since the former has been lifted so much just since the start of this year, not even counting the improvements seen during last year's stellar, almost once-in-a-generation bond bounceback. "That's the lay of the land," he surmised. "We're looking for new names."

GM lower in busy dealings

A trader saw "a lot of activity" in General Motors' benchmark 8 3/8% bonds due 2033, which "bounced around a little," trading in a range between 34 and 36, on "good volume." He saw the bonds going out at 35 bid, 35½ offered, which he said was around where they had traded on Wednesday, but with "a lot of volume today."

A market source at another desk said that by mid-afternoon, nearly $40 million of the benchmark bonds had traded, making them clearly the day's volume leader. Another source said the final tally was over $55 million, calling the bonds down ½ point around 35, while its 7.20% notes due 2011 lost more than a full point, also in busy dealings, to end at 34 bid.

Trader said that the benchmarks had traded between 34 and 35, finally settling around the latter number, which he said was down "about another 1/2" point, while seeing the 7.20s down 1½ points at 34. "So yeah, they're off, still."

On Wednesday, GM's bonds had skidded down to around the 37 level from prior levels as high as the 36 area after the top U.S. carmaker released its numbers for the 2009 year following its emergence from bankruptcy last summer.

In releasing what it termed its "fresh-start" accounting for the period between July 10 and Dec. 31, the company reported revenue of $57.5 billion and a net loss of $4.3 billion. The loss includes a $2.6 billion pre-tax impact related to the settlement loss of its UAW retiree medical plan, as well as a $1.3 billion foreign currency re-measurement loss.

Traders seemed to ignore the positive news contained in the GM announcement, including the fact that the carmaker said it had generated $1 billion in cash from operating activities, remained committed to repaying the outstanding balance of the bailout funds it received from the Canadian and U.S. governments "by June 2010 at the latest" - and envisioned possibly turning a profit for the current full-year period.

Ford falters a little

A trader meantime saw GM domestic arch-rival Ford Motor Co.'s 7.45% bonds due 2031 as having "sort of tailed off" to end at 91½ bid, 92½ offered, down ½ point on the session. He said that the Number-Two U.S. carmaker's paper "went on a wild ride," gyrating at time at bid levels between 91½ and 92½ - with "a couple of small pieces lower" - before settling in "on decent size" at the lower end of that range. "That's where they traded," he declared - "in that range, both sides of it and in the middle."

A second trader said that Fords "were pretty active," with the 7.45s around 92, which he called down 5/8 to ¾ point on the day.

A trader said that Visteon Corp.'s bonds "are up around par," on "a decent amount of activity" in the former Ford unit.

Noting that the bankrupt Van Buren Township, Mich.-based automotive parts supplier's bonds, like its 7% notes due 2014 and its 10¼% notes ostensibly due on Aug. 1 had already reached par levels, particularly in Wednesday's dealings, he said that "they've been bouncing around par" and pronounced them as unchanged, "holding to the higher levels" around par-101.

Gaming gains on good Vegas numbers

In the gaming arena, a trader saw "strength in the casino names, on the back of the monthly numbers out of Las Vegas." He saw improvement in Harrah's Operating Co. and particularly in its cross-town rival MGM Mirage, noting that the latter's New York Stock Exchange-traded shares were up more than 10%, at $14.73, on volume of some 98 million shares, nearly four times the norm.

He said that Las Vegas-based MGM Mirage's unsecured notes, like its 6 5/8% issue due 2015 were a point or two higher on the day at 84 bid, 85 offered. He said that the company's secured bonds, like its 13% notes due 2013 - currently hovering above 116 - "are unchanged, but they traded a bunch tighter to begin with."

Another trader said that Harrah's paper "looked pretty active," with the Las Vegas-based casino giant's 10% notes due 2018 seen at 84¼ bid, although he said that looked unchanged. The first trader, meantime, saw the paper up a point at that same 84ish level.

Nevada's Gaming Control Board said Thursday that revenue on the all-important Las Vegas Strip jumped by around one-third in February from a year earlier to $568 million for the month, up from $427 million a year earlier. With The Strip leading the way, overall statewide gambling revenue rose by about 14% to $947 million.

Among the factors boosting the latest February figures versus a year ago were the easy comparisons, since February 2009 revenues had fallen sharply from their year-earlier comps due to the economic problems prevalent at that time.

Another factor was the added gaming revenues generated by MGM Mirage's newest casino resort, the Aria, which the company rolled out in mid-December to anchor to its massive new CityCenter development project.

The state officials also noted a surge in revenues from baccarat - a high-stakes card game popular among high-rolling "whales," as big players are known. Baccarat win on the Strip soared by 255% year over year; without those revenues, overall casino numbers would have shown a decline, since slot machine revenues were off by 8%.

Blockbuster steady despite Icahn cut

Elsewhere, a trader said that Blockbuster's 9% subordinated notes due 2012 were pretty much unchanged around a 22 bid context, on "no real volume. It looked like it was quoted higher, but it didn't trade."

Investors apparently were unfazed by the news that billionaire Carl Icahn had once again reduced his holdings in the company's stock. According to a regulatory filing, Icahn - who before last week had owned 17% of the company's class A stock, cutting that big position down to just 3.77% - cut that stake further, to 3.5% And he completely liquidated what had formerly been his 5.65% stake in Blockbuster's class B stock.

Even so, a trader said that "surprisingly, I don't think the 9s traded. There's no real trades in Blockbuster today."

He did see the 9s quoted in a 211/2-23 context, while its 11¾% notes due 2014 were at 74 bid, 75¼ offered. "Maybe that's off a little - 1/2, ¾ point [versus Wednesday's quotes], but not much."

Another trader, upon hearing of Icahn's actions, proclaimed "I don't blame him - it's a dog."

The Blockbuster bonds had pushed higher on Wednesday following the announcement late-Tuesday that Blockbuster had reached agreements with two more major studios -- 20th Century Fox and Sony Pictures - that will allow it to rent DVDs on the same day they go on sale, similar to a previously announced deal with Warner Home Video. Blockbuster will also receive enhanced payment terms in exchange for a first lien on assets of its Blockbuster Canada Co. subsidiary.

Blockbuster said it is also in discussions with advisors for its bondholders related to debt recapitalization.

Six Flags little moved

A trader said he saw Six Flags Inc.'s bonds, like its 9 5/8% notes due 2014, trading around 35-36, "and then they started to tail off."

He saw the bankrupt New York-based theme park operator's paper head down to around a 321/2-34½ context, adding "that's where the quotes are," although he did not see very much real trading."

"No activity today," he said, pegging the notes at the end "around the middle of that market," at 34.

Tronox trades above the treetops

A trader noted that Tronox Worldwide LLC/Tronox Finance Corp.'s 9½% notes were trading as high as 1101/2, noting that "it's up 80 points" from the levels around 30 bid which the bankrupt Oklahoma City-based chemical pigments manufacturer's bonds had held as recently as the end of August, when they began climbing on news of a deal to sell much of the company's assets to Huntsman International LLC for $415 million.

Although that "stalking horse" deal eventually fell apart and was withdrawn, Tronox - which filed for Chapter 11 in January 2009 - was ultimately able to come up with $425 million from another source to fund its ongoing reorganization, and its bonds continued their gradual climb to current levels.

The trader saw no fresh news out Thursday that would explain the continued strengthening in the bonds. At the beginning of the month, though, the U.S. bankruptcy judge overseeing the company's reorganization quashed moves by Anadarko Petroleum Corp. - the corporate successor to former Tronox parent Kerr McGee - to stop a Tronox lawsuit alleging that Kerr McGee had defrauded investors when it spun Tronox off in 2006. Tronox claims its former corporate parent had loaded Tronox up with liabilities from discontinued former Kerr McGee operations, even though they were not related to Tronox's core pigments business.

However, U.S. bankruptcy judge Allan Gropper of the Southern District of New York, at the same time did toss parts of the underlying damage suit, including Tronox's claims for punitive damages

Chain store stats boost bonds, bank debt

A trader said that better-than-expected chain store sales had given a boost to retail names - for instance, he saw Bon-Ton Department Stores Inc.'s 10¼% notes due 2014 trading above par at 100½ bid, "the first time that one has been over par in a while, with their good numbers today."

In the bank debt market, Neiman Marcus Inc.'s term loan headed higher in trading as the company released March revenue numbers that showed a year-over-year improvement, according to traders.

The term loan was quoted by one trader at 95 1/8 bid, 95 5/8 offered, up from 94¾ bid, 95¼ offered, and by a second trader at 94¾ bid, 95¾ offered, up from 94½ bid, 95¼ offered.

On Thursday, Neiman announced that total revenues for March were $341 million, up 11% from $307 million in March 2009, and comparable revenues for the month were $337 million, up 9.6% from $307 million last year.

In terms of liquidity, the company's cash balance as of April 3 was approximately $500 million compared to $193 million in the prior year, and there were no borrowings outstanding under its $600 million asset-based revolver.

Neiman is a Dallas-based high-end specialty retailer.

© 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.