GM, Ford paper gains steam; Claire's, Bon-Ton slip; Charter brisk, steady; Northwest, Delta fly high

By Stephanie N. Rotondo

Portland, Ore., Sept. 10 - As the market continued to focus on the troubles at Lehman Bros., distressed bond traders said Thursday that most things were weaker to unchanged.

"For the most part, people were trading Lehman," said one trader. "There wasn't anything out of the ordinary."

"It was almost like it was two different days," he continued. "In the morning, it was an all equity focus, but then in the afternoon people started to pay attention."

Investors were paying attention to General Motors Corp. and Ford Motor Co. during the session. The carmakers saw their bonds boosted by news that they might be the recipients of $25 billion in federal loans - a deal that would help to alleviate bankruptcy pressures.

Meanwhile, Claire's Stores Inc.'s bonds headed down, as did those of Bon-Ton Stores Inc. Traders said Claire's debt weakened ahead of the company Friday conference call to discuss its second quarter results.

Charter Communications Inc.'s paper remained one of the more actively traded issues, traders said. But the bonds have remained virtually unchanged over the last few sessions. On Wednesday, company management restated its commitment to address its upcoming debt maturities.

Both Northwest Airlines Corp. and Delta Air Lines Inc.'s term loans gained ground during trading. Traders reported that the move came on the back of Northwest's request to make some changes to its credit facility.

GM, Ford paper gains

General Motors' debt gained a fair bit after news came out that the company, as well as rival Ford Motor, would likely get its hands on a government loan.

One market source called the 7.2% notes due 2011 up 4.5 points at 72.25, while another saw the 7 1/8% notes due 2013 up almost 3 points at 60.25 bid.

But another trader called the bonds "not very much changed," the 7.2% notes at 72 bid, 73 offered and the benchmark 8 3/8% notes due 2033 at 52 bid, 53 offered.

Another trader said Ford's longer issues, such as the 7.45% notes due 2031, "went a lot higher," pegging the debt at 55.5. He said the paper was "reasonably active," and up about "5 points in the last four trading days."

At another desk, Ford' 7% notes due 2013 gained nearly a point to close at 75.75 bid.

Both GM and Ford could get at least $25 billion in loans, based on a proposed federal loan program that will help the companies modernize their plants. The proposal would also significantly help to reduce the risk of bankruptcy.

With auto sales declining, GM and Ford have faced continued troubles. On top of economy-related woes, GM has also been hit closer to home, as its former subsidiary Delphi Corp. struggles to exit bankruptcy and its lending arm, GMAC LLC, has dealt with hefty losses at its Residential Capital LLC subsidiary.

GM and Delphi are facing more pressure regarding its pension plans. The companies have until Friday to reach an agreement where GM would take over the funds, or else face a $900 million lien.

Delphi's bonds have been on the quiet side, traders reported. The 6½% notes due 2013 were quoted at 14 bid, 16 offered in odd lots. Meanwhile, GMAC's 6 7/8% notes due 2012 ended at 60.5 bid, up a deuce.

In the rest of the auto sphere, Visteon Corp.'s 7% notes due 2014 gained half a point to 50.5 bid.

Claire's, Bon-Ton weaker

Claire's Stores debt slipped during Thursday trading ahead of the company's Friday earnings release.

A trader quoted the 9¼% notes due 2015 at 40, the 9 5/8% notes due 2015 at 26 and the 10½% notes due 2017 at 35.

Another trader also placed the 9¼% notes around 40.

"I don't think anybody is expecting good numbers out of Claire's," the trader said.

The Pembroke Pines, Fla.-based retailer will hold a conference call at 10 a.m. ET to discuss its second quarter results.

In the rest of the sector, Bon-Ton Stores' 10½% notes due 2014 finished lower, traders said. Several sources said the notes got as low as 40 before coming back to end around 42.

Last week, the York, Pa.-based retailer reported a 10.3% decline in same-store sales during the month of August. Total sales slipped 9.3% from a year ago. The company attributed the decrease to weak customer traffic.

Charter trading remains heavy

Charter Communications' debt continues to be traded somewhat heavily, although there has been no real news to cause the activity.

A trader quoted the 10¼% notes due 2010 at 96 bid, 97 offered, unchanged on the day. Another trader also saw that issue around that level, as well as the 11% notes due 2015 at 74.5. Yet another source deemed the 8% notes due 2012 down almost a point at 96 bid.

During a Wednesday presentation at the Merrill Lynch 2008 Media Fall Preview, Charter's management said that it continues to look for opportunities to address its $1.9 billion in debt maturing in 2010. Earlier this year, the company said that its cash flow and borrowing capacity would not be enough to cover cash needs in 2010.

Charter is a broadband communications company based in St. Louis.

Northwest, Delta loans higher

Northwest Airlines' term loan gained a couple of points on Thursday as the market learned about the company's amendment request, and Delta Air Lines' bank debt grabbed on to Northwest's coattails to move up as well, according to a trader.

Northwest, an Eagan, Minn.-based airline company, saw its term loan quoted at 90½ bid, 91¾ offered, up from Wednesday's levels of 83½ bid, 85 offered, the trader said.

Delta, an Atlanta-based airline company, saw its first-lien term loan quoted at 85 bid, 87 offered up from 84 bid, 86 offered, and its second-lien term loan quoted at 75 bid, 77 offered, up from 73½ bid, 75 offered, the trader continued.

On Wednesday night, Northwest held an amendment call to discuss revising covenants under its credit facility because of its pending merger with Delta.

As part of the amendment, Northwest will pay down 25% of the credit facility and shorten the maturity.

In addition, lenders will get a 3-point fee in connection with the amendment.

Broad market mixed

A trader pegged Spectrum Brands Inc.'s 7 3/8% notes due 2015 at 53 bid, 54 offered.

Several market sources said Tronox Worldwide LLC's debt continues to weaken.

"They have been kind of freefalling since the '80s," one source said. He quoted the 9½% notes due 2012 at 46 bid, 47 offered. But another saw the debt close around 44.

There have been issues with that one for awhile, he said.

OSI Restaurant Partners LLC's 10% notes due 2015 were quoted at 51 bid, 53 offered. A trader said he was not sure how much traded, but "there were a lot of quotes in those."

Trump Entertainment Resorts Inc.'s 8½% notes due 2015 remained steady around 46.

Sara Rosenberg contributed to this article.

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