GM gyrates higher, busily on Q1 profit, Ford firm too; First Data struggles again post-numbers

By Paul Deckelman and Sara Rosenberg

New York, May 17 - General Motors Corp.'s bonds saw heavy trading on Monday after the Detroit-based automotive giant reported a first-quarter profit - it's first black ink since mid-2007 - helped by its shedding of debt and other expenses during last year's bankruptcy as well as strong sales from some new models. Various traders saw the GM bonds anywhere from up ½ point to up by 2 points.

GM's good news was seen having towed the bonds of its main domestic competitor, Ford Motor Co., higher as well.

First Data Corp.'s bonds - which had been on the slide on Friday after the company released disappointing quarterly numbers - were seen continuing to backtrack on Monday.

Ahern Rentals Inc.'s bonds, which had swooned by round a dozen points on Friday in apparent investor response to unfavorable quarterly results, were seen holding around those same upper-50s levels on Monday.

Washington Mutual Bank's bonds were seen a couple of points lower, as noteholders digested the changes which its parent company had made in its plan of reorganization filed with the bankruptcy court.

Meanwhile, bank-loan market participants reported little activity in distressed names on Monday, although they did hear that NextMedia Operating Inc. reverse flexed pricing on its $135 million six-year term loan.

GM moves around

A trader said that General Motors' bonds were up about 2 points, "solidly across the board," following the release of its first-quarter earnings data.

"They came out with good numbers," he said of the biggest U.S.-based auto manufacturer, quoting its benchmark 8 3/8% bonds due 2033 as having risen to 36 bid, up from prior levels.

A second trader said that GM "seemed to really be about the only activity out there."

He said that the big carmaker's bonds, like the benchmark paper, he opened "first thing this morning" trading around 35¼ bid, "then as the morning wore on" the bonds get as good as 37¼ bid, but "then it kind of worked its way back down" to around 361/2-36 5/8.

"They were up, but then they kind of moved back down," he said. He saw "most of the trading today" taking place between 36 and 37, with Trace showing some $148 million of the benchmark bonds having changed hands. Unlike the rest of the rest of Monday's junk bond market, which saw generally sleepy activity, on GM he saw "pages after pages" of trades on the Trace system.

"Who knows how they're counting it?" the trader said, adding that "each one of those [$1 million-plus] trades was not just $1 million - it was in multiples, so that the number could be a little bit smaller [than $148 million] - or it could be a lot larger. We don't know"

Another trader proclaimed that GM "did pretty well," pegging the bonds up 1½ points around 36 bid, 36½ offered.

However, yet another trader, while seeing "an awful lot of volume," only saw the bonds as unchanged to up perhaps ½ point, reiterating that the issue had seen "really good volume."

GM reported first-quarter net income of $865 million, or $1.66 per share - the first quarterly profit GM had shown since the second quarter of 2007, when it earned $891 million.

The latest quarterly results represented a sharp turnaround from the car company's loss of $6 billion, or $9.78 per share, a year earlier, during the period when GM was readying itself for its bankruptcy filing. First-quarter revenue was $31.5 billion, a 40% jump from a year ago.

GM's performance also improved on a sequential basis from the $3.4 billion of red ink recorded in the fourth quarter of 2009 on revenues of $32.3 billion. That quarter was the company's first full quarter of operations out of bankruptcy protection, since GM spent a portion of the 2009 third quarter under the Chapter 11 umbrella.

GM attributed its improved performance to its having shed tens of billions of dollars of debt and other burdensome obligations after going under the bankruptcy scalpel last year, as well as to robust sales on some of its new vehicles, such as the Chevrolet Equinox, a small sport-utility vehicle and the Buick LaCrosse luxury sedan.

Sales of those popular offerings produced a $1.2 billion profit versus the $3.4 billion loss seen a year earlier - one of a string of big losses which GM suffered at its core North American division in the several years before the bankruptcy.

While the numbers were impressive, GM's chief financial officer was not confidently popping any champagne corks, warning analysts and investors on the conference call following release of the results that he would "still be reasonably cautious about the rest of the year," explaining that GM may have a tough time sustaining that kind of profit level for the remainder of the year, since Q1 output in Detroit is usually higher than other quarters as carmakers ramp up for the spring selling season.

Ford along for the ride

A trader said that GM domestic arch-rival Ford Motor Co.'s bonds were also up by around ½ point, "which would have been higher, but the market was heavy for most of the day."

He said the credit "got dragged along a little bit too." Ford bonds, he continued, "have been performing well. GM's have gotten much more beat up in this little downturn," and so would be likely to snap back more strongly and head higher.

A trader saw Ford's 7.45% bonds due 2031 up ½ point at 90 bid, 92 offered.

But another trader said that the Dearborn, Mich.-based Number-Two U.S. carmaker's long bonds a point lower in an 88-89 context.

Elsewhere in the automotive realm, a trader saw Lear Corp.'s bonds off by around a point, quoting the Southfield, Mich.-based automotive systems maker's 7 7/8% notes due 2018 at 97 7/8 bid and it 8 1/8% notes due 2020 at 99½ bid. He saw no fresh news out about the company.

First Data fall continues

A trader said that First Data Corp.'s 9 7/8% notes due 2015 at 84¾ bid, while its 10.55% notes due 2015 were at 80½ and its 11¼% notes due 2016 were at 76¼ bid. He called those levels down ½ to ¾ point "across the board," on top of the losses notched on Friday following the release of numbers by the Greenwood Village, Colo.-based electronic transactions processor.

A market source at another shop estimated that the 9 7/8s were down around 1¾ points on the session at 85 bid, and saw its 10.55s likewise down nearly 2 points at 801/2.

On Friday, the company's bonds had plunged between 3 and 5 points after the company reported a first-quarter net loss of $240 million, widening out from a $231 million loss in the prior year.

Adjusted EBITDA for the quarter was $424 million, down from $472 million for the first quarter of 2009.

Revenues for the quarter, however, were up 16% at $2.4 billion, versus $2.1 billion in the comparable period last year.

Also, as of March 31, the company had about $293 million outstanding under its revolving credit facility, compared to having nothing drawn at Dec. 31, 2009, and during the quarter the company made $32.1 million of principal payments on its U.S. and euro term loans.

Ahern stabilizes after Friday plunge

A trader saw Ahern Rentals Inc.'s 9¼% second priority senior secured notes due 2013 hanging around the same levels in the upper 50s to which they had fallen on Friday following the release of disappointing quarterly numbers by the Las Vegas-based equipment-rental company.

"They didn't trade today, at least not in size," he said. "There was no real follow-through" from Friday's downturn. He said the bonds were down "11 or 12 points" from their pre-numbers levels.

A second trader added that he "did not see a thing" in Ahern.

However, another said that the bonds wended in a 58-60 context, which he called up 4 points from their Friday low, going out quoted at 59 versus about 57 at the opening Monday.

On Friday, those bonds had opened at 55, well down from 68½ on Thursday, then pushed back up into the mid-60s and stayed there for most of the day - only to take a late plunge back down into the 50s, with some $10 million of the paper having changed hands.

Ahern on Friday released its latest quarterly results, including a wider net loss of $20.214 million, versus its year-earlier red ink of $13.543 million, and a fall in EBITDA to $5.9 million, or a 9.8% margin, versus $21.2 million, or a 30.1% margin, for the same period in 2009.

CIT steady, WaMu wavers

A trader said that New York-based commercial lender CIT Group Inc.'s several issues of 7% bonds saw some activity, but ended pretty much unchanged.

He saw CIT's 7% notes due 2013 still trading around 961/2-97, just as they had done on Friday, while the longer paper - the 7% notes due 2017 -- held steady in a 91-92 context on "moderate trading," with no fresh news out on the company.

A trader said that Washington Mutual Bank's bonds closed around a 42-44 context, down 2 points on the session - and at one point it had been as much as 3 points lower.

At another desk, those bonds, such as the 5.55% notes that were to have come due next month, were seen down some 2 7/8 points on the day at 43½ bid. On the other hand, bonds of corporate parent Washington Mutual Inc., such as the latter's 5¼% notes due 2017 continued to trade at a premium, quoted up 1 3/8 points at the 105 level.

Seattle-based WaMu, once the nation's largest thrift operator, filed n amended reorganization plan over the weekend with the Wilmington, Del. court which is overseeing its bankruptcy case (see related story elsewhere in this issue).

Broader market a mixed bag

A trader saw Harrah's Operating Co. Inc.'s bonds "kind of active," quoting the Las Vegas-based gaming giant's 11¼% guaranteed senior secured notes due 2017 around 104.

Another market source saw the Harrah's bonds moving around between 104 and 105, down a little from Friday's levels in a 1051/2-106 context.

At another desk, a trader quoted Harrah's bonds, such as the 10¾% notes due 2016 ending around 81 bid, 82 offered, on "not a lot of trading, but some trades."

He saw the '17s right around 105 bid, calling those bonds up 1 point.

A trader saw Blockbuster Inc.'s 9% notes due 2012 "pretty much unchanged" on the day at 19¾ bid, adding that the Dallas-based movie-rental company's senior subordinated bonds were "inactive - there were just one or two trades."

A trader said that Clear Channel Communications Inc.'s 10¾% notes due 2016 were "slightly active," calling the San Antonio, Tex.-based media company's bonds down around a point at 77 bid.

NextMedia reverse flexes loan

In the bank-loan market, NextMedia Operating reverse flexed pricing on its $135 million six-year term loan (B3/B+) to Libor plus 625 bps from Libor plus 700 bps and cut the original issue discount to 99 from 98, according to a market source.

The 2% Libor floor was left unchanged.

Credit Suisse and Bank of America are the lead banks on the deal, which also includes a $10 million first-out revolver (Ba3) that is not being syndicated.

Proceeds will be used to help settle existing claims in connection with the Greenwood Village, Colo.-based radio station operator's emergence from Chapter 11.

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