Quiet market range-bound with easier bias; Freescale fumbles; auto parts skidding, Ford slips

By Paul Deckelman and Sara Rosenberg

New York, June 22 - The first official trading day of the summer season on Monday was about what everyone expected - sleepy, with the distressed bond sector taking its cues from the larger high-yield market, which was also pretty much becalmed.

Traders noted the impact that televised sporting events like the U.S. Open golf tournament and the Wimbledon tennis championships (and starting momentarily, World Cup soccer) were having on the attention span of market participants, giving them a convenient excuse for not doing anything in a soggy and uncertain market climate. Last week's junk bond market heaviness continued into Monday, pushing many issues down a little and stilling volumes.

"It was a little lower, and quiet," one said.

Given that the overall high yield market was lower, a trader agreed that "there's probably a little of that going on as well" in the distressed-debt arena. He called it "really quiet and boring."

Another called the day's trading "a lot of nothing."

Among the issues which were doing something, a trader called Freescale Semiconductor Inc. one of the more active names, continuing the erosion seen throughout much of last week.

Automotive parts makers like ArvinMeritor Inc. were also seen points lower, amid fading hopes for a larger government bailout of the hard-hit sector. Ford Motor Co.'s bonds continued to do a slow fade from their recent peaks.

There was little impact seen on the news that Hovnanian Enterprises Inc. will buy back one series of outstanding bonds and tender for bonds from several other series as well.

Bank loan traders meantime saw little or no movement in paper of distressed credits.

Freescale flops around

A trader called Freescale Semiconductor's 8 7/8% notes due 2014 "one of the more active" credits in an otherwise sleepy session. He said the bonds - which last week had swooned from a level around 60 at the start of the week to an ending level around 51 bid, 52 offered. They continued that erosion on Monday, dropping to 59 bid, 50 offered on mid-afternoon volume of over $11 million -- sizable for the day's quiet market.

He saw no specific news on the Austin, Tex.-based computer chip maker that might explain the decline.

Hovnanian stays home

A trader said that he "didn't see a whole lot of" activity in Hovnanian Enterprises' bonds, even on the news that the Red Bank, N.J.-based homebuilder plans to buy back all $28.87 million of its outstanding 6% senior subordinated notes due 2010, paying a price in the upper 90s, and will spend up to $60 million to buy back portions of eight other series of bonds via a pair of Dutch auction tender offers.

He said that the company's longer-dated issues, like the 6¼% notes due 2015 and 6¼% notes due 2016 - among the bonds being tendered for in the Dutch auction - were "right around 50; I think that's where they stayed."

He said that the 6s, which are being taken out at a price of 98.5 for holders tendering their bonds by the 5 p.m. ET July 2 early participation deadline and 95.5 after that, "didn't even trade today. With $28 million outstanding, you're not going to see may quotes. It just wouldn't be active."

Another trader said that he "didn't see a single picture in Hovnanian today."

There was, he said, "a little bit of bidding on Friday, but not much trading." He said that Hovnanian was one of the names, "surprisingly, where there should be activity - but there hasn't been."

On the other hand, another market source saw its 6 3/8% notes due 2014 up as much as 4 points to the 56 level.

CIT quietly easier

Among the financials, a trader said that the recently fallen angel CIT Group Inc.'s bonds were "a little lower, but on not a whole lot of volume."

He said that the New York-based commercial lender's 5.20% notes due 2010 were in the 80s, hovering around 82 bid. "It moves a point or so," he said. He estimated that "the longer CIT paper is probably down a point," quoting the 7 5/8% notes due 2012 at 73½ bid, 74 offered, off about 1½ points from Friday's levels.

Another market source saw CIT's 4.65% notes due 2010 down 2½ points to the 84 level. On the long end of the curve, its 6% bonds due 2036 eased to 48 bid.

Ford seen mixed; parts companies lower

Among the automotive names, a trader said that "Ford seems to be holding up," quoting the Dearborn, Mich.-based carmaker's 7.45% bonds due 2031 as remaining around the same 57-58 context "where they were" on Friday, although there was "not a lot of volume," so he held out the prospect that "it could be quoted a little lower, but that's about where I saw it." He saw the shorter paper, such as Ford Motor Credit Co.'s 7 3/8% notes slated to come due on Oct. 28, at 983/4, 99 bid, "probably unchanged to a little better."

However, at another desk, a trader said that the Ford long bonds - which spent all of last week on the slide, coming down into the upper 50s from prior levels as good as 70 bid - lost another 2 points to close at 55 bid, 57 offered.

The whole Ford structure had moved up smartly in April, May and early June after the Number-Two domestic carmaker successfully completed a major debt-exchange transaction that enabled it to slash its obligations, and as Ford's main domestic arch-rival, General Motors Corp., descended into the throes of bankruptcy reorganization, while Ford avoided that fate. However, after peaking at around 70 in early June, the 7.45s has descended over about a week's worth of trading into the 50s, sometimes falling several points a day, on what's been described as a mixture of profit-taking, the Ford advance simply running out of gas, and Ford being dragged down by the overall junk market heaviness of the past week, which was seen continuing into Monday.

A trader meantime saw GM's 8 3/8% bonds due 2033 unchanged at 12½ bid, 13½ offered.

Another trader saw those GM benchmark bonds "still hanging around" 12½ bid, 13 offered, off a touch from levels about ¼ point higher at which they had started the day. He said that GM's other bonds "were a little lower than that. The 8 3/8s seem to be quoted [at] the best [levels]."

Another market source saw the Ford Credit 7% notes due 2013 down more than a point to just under 79 bid, but saw GM's equivalent, GMAC LLC,' down further, its 6 7/8% notes due 2012 quoted down as much as 5 points on the session to around the 77 mark.

Among the parts suppliers, ArvinMeritor's 8 1/8% notes due 2015 were seen down more than 3 points, in fairly busy trading, at the 46 level. There was no fresh news seen out on the Troy, Mich.-based automotive components maker, whose bonds had been among those in the sector which had shown strong gains earlier in the month on the possibility of the government increasing the size and scope of the bailout it has extended to the parts suppliers; however, there were some news report late last week indicating that Washington has no plans to increase the bailout assistance, barring a big disruption in the pasts-supply chain.

Southfield, Mich.-based automotive interior components maker Lear Corp.'s 5¾% notes due 2014 were seen down by 2 points at 23 bid, while bankrupt Van Buren Township, Mich.-based parts maker Visteon Corp.'s 7% notes due 2014 were also down a deuce, at around the 5 bid mark.

Momentive not moving despite upgrade

A trader saw Momentive Performance Materials Inc.'s 11½% notes due 2016 quoted "in the high 20s, but they did not trade today."

He said the Albany, N.Y.-based silicones manufacturing company's 9¾% notes due 2014 likewise showed "no activity, you don't see any activity in that," staying around the 46 level, even though Standard & Poor's said its ratings on the company, following its issuance of $200 million of second-lien notes due 2014 in exchange for a total of about $350 million of various senior unsecured and subordinated notes.

That led S&P to up its senior unsecured and subordinated debt ratings on the company to C from D, while lifting the corporate credit rating to CCC- from SD, or selective default. But even while raising those ratings, the agency cautioned that the company still carries "extremely high leverage."

Analyst Cynthia Werneth pointed out in her ratings upgrade announcement that as of March 29, Momentive's total adjusted debt was close to $4 billion, and the ratio of total adjusted debt to EBITDA was "well into the double digits."

Six Flags steady as auction set

A trader saw Six Flags Inc.'s 12¼% exchange notes due 2016 at 60 bid, 62 offered, while the bankrupt New York-based theme park operator's other bonds, like its 9 5/8% notes due 2014 and 9¾% notes due 2013 were all around an 11 to 12½ context.

Markit and Creditex said the auction to settle credit default swaps for Six Flags and its Six Flags Theme Parks Inc. subsidiary will be held on July 9.

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