Refco bank debt on the rise; Owens Corning bonds gain on numbers

By Paul Deckelman and Sara Rosenberg

New York, May 2- Refco Inc.'s bank debt was on the rise Tuesday as news emerged that a deal was reached between Austria's Bank fuer Arbeit und Wirtschaft (Bawag) and Refco creditors, loan traders said.

In the junk bond market, Owens Corning's bonds were heard to have firmed after the bankrupt Toledo, Ohio-based insulation maker reported what it termed "record" sales and operating results in the first quarter.

And Calpine Canada Energy Finance ULC's bonds were being beaten down as the sharp recent run up in the name apparently fizzled out.

Refco's bank debt closed out the day quoted at 103.5 bid, 104 offered, up about ½ point from previous levels of 103 bid, a bank loan trader said, citing the Bawag agreement.

That accord between Refco creditors and Bawag settles allegations that the Austrian bank was involved in the whole Refco fraud debacle that led to last fall's bankruptcy filing by the New York-based provider of execution and clearing services for exchange-traded derivatives, and brokerage services in the fixed income and foreign exchange markets.

Refco's 9% notes due 2012, which have been moving steadily higher over the past few sessions, meantime got as good as 83 on Tuesday, a trader in distressed notes said. However, the bonds later came off that peak level to finish around 78 bid, 79 offered, a gain of just a point on the session.

That trader also saw Owens Corning's bonds better in the wake of the company's improved numbers. He quoted its 7% notes due 2009 two points up at 89 bid, 90 offered, while its 7½% notes due 2018 were a point better at 89 bid, 91 offered.

A market source at another desk saw the 7s firm to 88.75, up two points, with the 71/2s going to 90.75 bid from 88.5, and the company's 7.7% notes due 2008 improving to 90.5 from 89 bid.

Owens Corning said its income from operations was $115 million, a sharp improvement from its year-earlier loss of $4.281 billion. Sales in the latest period were $1.6 billion, up from $1.4 billion in the year-earlier quarter, rising on strong demand for its building materials systems.

The bonds of bankrupt Lancaster, Pa.-based floorcovering maker Armstrong World Industries Inc., which like Owens Corning was driven into Chapter 11 under a flood of asbestos claims, so that its bonds often move in tandem with Owens, were up on Tuesday, gaining a point to either 74 bid, 75 offered for the 6-handle coupon issues or 75 bid, 76 offered for the 9% area coupons.

Foamex keeps rising

Bankrupt Linwood, Pa.-based foam rubber manufacturer Foamex International Inc.'s 9 7/8% notes due 2007 - which on Monday had pushed up as much as four to five points on the session - continued to gain on Tuesday, rising two more points to 94 bid, 96 offered.

Traders cited market buzz that the company might revise its plan of reorganization, speculation sparked by the company's statement last week that it is revising its business plan "in light of recent favorable developments in Foamex's business performance." Once the revised plan is completed, Foamex "will consider any appropriate modifications" to the bankruptcy plan, the company statement said.

GM revolver higher

General Motors Corp.'s bank loan posted some gains on Tuesday, despite news that April 2006 sales were down, according to a trader in that market.

The Detroit-based auto giant's revolver closed out the day quoted at 95 bid, 95.75 offered, up about a quarter to a half a point from previous levels, the trader said.

On Tuesday, GM announced April 2006 numbers that showed its U.S. sales of new cars and trucks to be 345,404, down 7% from a year ago.

In addition, in April, total car sales were down 18%, while truck sales were up 2%. Retail sales in April were down 5% compared to year-ago deliveries. Fleet sales were down 10.5%. And, daily rental sales declined by 23% compared to last year.

"Given that the industry came in somewhat below our initial expectations, we are pleased that our retail sales were in line with the targets established in our North America turnaround plan," said Mark LaNeve, GM North America vice president, vehicle sales, service and marketing, in the release. "Consumers continue to respond very favorably to our new products, particularly the all-new Chevy Tahoe, GMC Yukon and Cadillac Escalade, resulting in a combined 15% sales increase compared to last month."

GM's 8 3/8% notes due 2033 were seen up a point on the day, a trader said, at 75 bid, 75.5 offered.

Calpine Canada plunges

Calpine Canada was "the big mover" on the day, a bond trader said, quoting the Calpine Corp. special-purpose unit's 8½% notes due 2008 "off at least eight, nine, 10 points," at 47 bid, 49 offered.

Another trader likewise saw those bonds - which he said "had been rallying lately" - at 47 bid, 48 offered, down from 56 bid, 57 offered previously.

"They had run up in comparison to some of the other [Calpine] debt," the first trader said. "The thought was that they were going to be worth more - they were going to get a bigger recovery" from the bankrupt parent San Jose, Calif.-based power producer's restructuring, which is now going on under Chapter 11.

"I haven't read yea or nay on that yet," he said, "but I guess it's not true - because they were getting mooshed here, and [the bond bears] are pretty much picking on that issue.

"It really ran up and it was trading a hell of a lot stronger than a lot of the other [Calpine] paper - but now it's getting crushed, down anywhere from eight to 10 points on the day."

Another market source said that those bonds which were trading around 60 a month ago, got as good as a 64ish context around the middle of the month. From there, they gradually declined, into the upper 50s as April was coming to an end, still holding as high as 57 bid late last week. The source saw those bonds actually retreat into the lower 50s - around 53-54 - in Monday's dealings, and saw them tumble further Tuesday, gyrating around between 47 and 49.5 late in the session.

Perhaps coincidentally - or perhaps not - Calpine and its Canadian subsidiary announced late Monday that they would begin making available on the Sedar document retrieval website maintained by the Canadian Securities Administrators - essentially, Canada's counterpart to the Edgar system operated by the Securities and Exchange Commission - "applicable documentation relating to internal financings entered into by ULC with Calpine and affiliated companies Calpine Canada Energy Ltd. and Quintana Canada Holdings, LLC. This documentation is being placed on Sedar as a way of making it readily available to all creditors of ULC," the companies said.

Parent Calpine's own bonds, meantime, were seen as mixed. What issues were lower suffered nowhere near that kind of dramatic drop. A market source called Calpine's 8¾% notes due 2007 down two points at 55 bid. However, another source saw the parent's 8½% notes due 2011 as having moved up to around the 37 bid area from recent levels around 33.5.

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