DirectBuy bonds 'on a rollercoaster' as CFO set to leave; General Maritime debt regains ground

By Stephanie N. Rotondo

Portland, Ore., March 23 - Distressed debt continued to lose investor focus as new issues remained in the spotlight, distressed traders said Wednesday.

"New issues certainly did dominate," a trader said, calling the day "torturous."

Still, some credits did manage to garner a second look, particularly DirectBuy Holdings Inc.'s debt, which continued to topple.

The bonds fell nearly 20 points on Tuesday, due to an executive resignation, a trader told Prospect News on Tuesday. The bonds remained under pressure come Wednesday, falling into the low-50s, only to close out in the high-60s.

Meanwhile, General Maritime Corp.'s bonds remained on an upward path after last week's sell-off. Following news of a delayed 10-K - among other things - the debt had dipped into the low-80s, but cracked 90 in midweek trading.

General Motors Corp. paper staged a late-day rally, ending the day a bit higher than Tuesday's close. A trader said the bonds opened a lot lower, but managed to come back by end of business.

DirectBuy debt 'cracks'

DirectBuy Holdings' debt "became direct-sell," as the market reacted to news regarding an executive departure, a trader said.

The 12% notes due 2017 hit a low of 59 bid, 62 offered in Wednesday trading, the trader said, but ended 67 bid, 68 offered.

"That's still down a ton," he said. The bonds had started the previous session in the mid-90s, and then traded down to the mid- to high-70s after the company said its chief financial officer was resigning during a bondholder conference call Tuesday.

"They really cracked today," the trader said. "Makes everything else pale [by comparison]."

"These things were on a rollercoaster," said a second trader.

He saw the notes hitting a low of 53 bid, 61 offered, but said they closed 67 bid, 68 offered.

DirectBuy was still "getting clobbered," another trader said, seeing the bonds move below 60 and finish in that same 67-68 context.

"Lotta trading, lotta volatility," he said.

DirectBuy is a Merrillville, Ind.-based home improvement and furnishings club.

GenMar bouncing off recent lows

A trader said General Maritime's 12% notes due 2017 "continued to bounce off of its recent sell-off."

The bonds had hit a low of 82 bid, 84 offered recently, he said. On Tuesday, they traded up to 87 bid, 88 offered, closing out Wednesday "wrapped around 90."

"They were 93 [bid], 94 [offered] before all this happened," he added, referring to news out on March 16, when the company said it would delay filing its 10-K - thereby also canceling its quarterly conference call - and that it was also in talks with lenders and other investors regarding a potential restructuring of refinancing.

Still, the trader said the bonds were "down less than the coupon accrual, so there's been a pretty nice recovery on that one."

General Maritime is a New York-based crude and oil products tanker company.

GM rallies a bit

General Motors' benchmark bonds "started off weaker in the morning," according to a trader.

The 8 3/8% notes due 2033 fell to around 29 on Tuesday and dipped as low as 28½ during the midweek session, before rallying back to 291/2, the trader said.

Another trader also saw the bonds at 291/2, calling that half a point better on the day, though on "not a lot of action."

GM is a Detroit-based automaker.

Broad market mostly unchanged

Among other distressed issues, Sprint Nextel Corp.'s bonds "sold off a little in the morning," a trader said, though most issues closed the day unchanged.

He said the 6% notes due 2016 dropped half a point to 101, while the 8 3/8% notes due 2017 were unchanged around 1121/2.

The trader also deemed the 6 7/8% notes due 2028 unchanged at 92 bid, 92¼ offered.

Another trader saw Caesars Entertainment Corp.'s 10% notes due 2018 falling 1½ points to 891/2.

The same trader said OPTI Canada Inc.'s 7 7/8% and 8¼% subordinated notes due 2014 were "pretty active," but unchanged around 531/4.

Paul Deckelman contributed to this article

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