GM CEO upbeat about future, bonds improve; trader sees fewer distressed prospects in market

By Stephanie N. Rotondo

Portland, Ore., Sept. 16 - Distressed debt remained on the firm side during Thursday trading, though the bulk of trading volume remained in new issues.

"Lots of upward prices," a trader said.

General Motors Corp.'s bonds improved during trading following positive comments made by the company's top executive. An upgrade from Barclays on Ford Motor Co. stock might have also helped, according to a trader.

Meanwhile, one market source opined that there were fewer distressed opportunities in the market, adding that he considered only two credits to be under that umbrella: Blockbuster Inc. and Ahern Rentals Inc. On the day, Blockbuster's debt continued to trade stronger, though Ahern was about unchanged.

Also, traders saw Rite Aid Corp. bonds trading in mixed fashion. The company is getting ready to release its quarterly results later this month.

CEO comments boost GM

Comments made by General Motors' chief executive officer helped the bonds move up almost a point on the day in heavy trading, according to market sources.

A trader called the benchmark 8 3/8% notes due 2033 up "maybe a quarter" at 313/4, while the 7.4% notes due 2025 increased "maybe a point" to 29 5/8.

Another trader pegged the 8 3/8% notes at 31½ bid, 34 offered, deeming that up half a point to a point.

"[GM CEO Dan] Akerson was on the tape making some comments, said he was pleased with September U.S. sales," the trader said.

Akerson was interviewed by several news outlets at an hour-long meeting in Detroit, according to reports. In addition to his comments regarding the monthly sales report, Akerson also said he hoped to increase production as demand increases.

"I think it's clear that we have good demand, strong demand in certain models," he said. "It's my sincere hope that that demand will drive production, and obviously associated with production will be jobs."

While Akerson was overall very positive about GM and its future, he noted that he did not expect taxpayers to be paid back anytime soon.

"I don't think that's going to be in one fell swoop," he said. "So we have to post those numbers and provide some consistent results. Over the next couple of years that will happen."

Few real distressed credits

Distressed debt traders have been lamenting the lack of real distressed credits, especially as a new issue craze has taken over.

"That's all about 90% of the client base wants to do," a trader said.

And, even in certain names that are technically considered distressed - for example, those that are currently operating under Chapter 11 protections - bonds are trading in the 80s or higher.

"I think Blockbuster and Ahern are the only ones left you can still call distressed," he said.

For its part, Dallas-based Blockbuster is reported to be preparing a bankruptcy filing. However, in the last few sessions, the company's bonds have been trading up.

The trader said the debt "grinded a little bit higher" during Thursday trading, with the 9% notes due 2012 closing at 8½ bid, 9 offered and the 11¾% notes due 2014 at 54 bid, 55 offered.

Another trader said the 9% notes "continued to move up," placing them at "plus/minus" 8.

Las Vegas-based construction equipment provider Ahern meantime saw its 9¼% notes due 2013 remaining around 39 bid, 40 offered, the first trader said.

Rite Aid ends up, down

Rite Aid debt finished the day mixed, traders reported.

One trader said the 9½% notes due 2017 slipped slightly to end around 84, while the 9 3/8% notes due 2015 inched up a tad to 861/2.

Another trader called the 9½% notes "pretty much unchanged," also around the 84 mark.

And another source deemed the 8 5/8% notes due 2015 up almost 4 points at 87 bid.

Rite Aid is a Camp Hill, Pa.-based drugstore chain.

Broad market mixed

In the rest of the distressed arena, the "always kind of active" 11 3/8% notes due 2014 from NewPage Corp. closed "basically unchanged, maybe down a quarter" around 92, a trader said.

The trader also saw the 10% notes due 2012 gaining over a point to end at 491/2.

Energy Future Holdings Corp.'s 11¼% notes due 2017 were also up around a point at 481/2.

Edgen Murray Corp.'s 12¼% notes due 2015 fell about half a point to end around 75.

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