GM bonds fall in line with stock; NewPage subs gyrate, end steady; Kodak still under pressure

By Stephanie N. Rotondo

Portland, Ore., March 4 - A distressed debt trader said Friday's market ended mixed, while another noted that empty desks continued to result in thin volume.

"Some things were up, some things down," the first trader said.

The second trader said that JPMorgan Chase & Co.'s week of conferences was winding down, but that many players remained out.

General Motors Corp. bonds were seen drifting downward, in line with the equity's performance, according to a trader. The bonds had also dipped in the previous session, as news reports said that the bankruptcy judge overseeing the company's case intended to approve its bankruptcy plan.

Meanwhile, NewPage Corp. remained an active credit. The subordinated issue was the dominant of the issues, gyrating around until it finished up about unchanged.

Eastman Kodak Co.'s notes continued to be under pressure as investors attempt to figure out if and when the company might turnaround. Still, a trader said that volume was light in the name.

GM dips with equity

General Motors' benchmark 8 3/8% notes due 2033 "continues to drift with the stock," a trader said.

He said the bonds were "going lower," falling to 31½ bid, 31¾ offered in the final trading session of the week.

The stock (NYSE: GM) fell 64 cents, or 1.94%, to $32.39.

But another trader said the debt was "kind of unchanged" at 31¾ bid, 32¼ offered.

"They traded down to this level yesterday," he said, after a bankruptcy judge said he would approve the bankruptcy plan for the so-called bad GM, also known as Motors Liquidation Co.

Approval of the plan will allow for distribution of stock and warrants to unsecured creditors. The bonds linked to the old GM will be converted to equity.

Final approval is expected to be secured shortly.

GM is a Detroit-based automaker.

NewPage notes 'volatile'

A trader said NewPage's 10% subordinated notes due 2012 "continue to be active," as has been the trend of late.

The bonds were "more volatile" during Friday's session, trading "north of 70," only to close the day at 69½ bid, 70 offered, virtually unchanged.

The 11 3/8% senior notes due 2014 were "dead today," the trader added, and were "still around north of par."

At another shop, a trader said the 10% notes were half a point weaker at 691/4, though he saw the bonds trading between 69 and 70½ throughout the day.

He added that about $23 million of the notes changed hands.

He also said the 11 3/8% notes were "pretty quiet," seeing them just above par.

There remained no fresh news out on the Miamisburg, Ohio-based coated papermaker.

Kodak drifting down

Eastman Kodak notes were "down some more," according to a trader, just one day after Moody's Investors Service cut the company further into junk territory.

He quoted the 7¼% notes due 2013 at 93 bid, 94 offered.

"They're down a few points this week," he said.

"There's not a lot of activity [in the credit], but they are lower," said another trader. He called the notes down a point, "maybe more" at 93¼ bid, 94¼ offered.

Another market source placed the paper at 93½ bid, down nearly a deuce on the day.

On Thursday, Moody's dropped Kodak's long-term credit rating to Caa1 from B3, and gave the credit a negative outlook. The ratings agency attributed its action to ongoing weakness in the company's core business operations.

As previously reported, a market source said the downgrade was "completely expected."

On Wednesday, news outlets reported that Investment Partners Asset Management was looking to Kodak shareholders Legg Mason Capital Management and Fidelity Management - which own a total of about 24% of the company's equity - to take a more active role in the company's turnaround by bringing in a turnaround specialist or forcing a sale.

Also on Wednesday, the Rochester, N.Y.-based company said it completed the acquisition of substantially all of the assets of the relief plates business of Tokyo Ohka Kogyo Co., Ltd.

Solo trades down

A trader said of Solo Cup Co.'s 8½% senior subordinated notes due 2014 that "there was some activity in those things."

He saw the Lake Forest, Ill.-based paper and plastic cup, plate and utensil maker's bonds staying in the same 84-84½ context at which they had traded on Thursday, estimating them to be unchanged to down half a point.

Paul Deckelman contributed to this article

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