Adelphia bank debt firms on lender call; distressed bonds mostly quiet despite stock surge

By Paul Deckelman and Sara Rosenberg

New York, June 15 - Adelphia Communications Corp.'s TCI bank debt was stronger and active on Thursday as an ad hoc lender call took place to discuss various investor concerns, according to a trader.

Over in the junk bond market, the bonds of distressed companies mostly stayed within a relatively narrow range, even as the stock market - frequently an influence on the behavior of the junk mart - came roaring back after having recently taken a severe pounding.

Among the names which were seen not much moved were automotive giant General Motors Corp., its former subsidiary, Delphi Corp., and another bankrupt parts supplier, Dana Corp.

One distressed area that did see somewhat better levels, however, was asbestos-challenged names such as Owens Corning, Armstrong World Industries Inc. and Federal-Mogul Corp.

A trader in the bank debt market saw Adelphia's TCI paper closing out the day quoted up by about a point at 98.25 bid, 99 offered.

"There's been general discomfort for the full process. Concern that the agents are receiving offers from the unsecureds for a settlement and not distributing the information to the broad lender group," the trader explained.

The 3 p.m. ET conference call "made everybody feel a little better that they may not be escrowed," the trader added.

While Adelphia's bank debt was better, the bankrupt Greenwood Village, Colo.-based cable company's notes were not. A trader quoted its 10¼% notes due 2006 at 46 bid, 48 offered, and its 10¼% notes due 2011 at 51 bid, 53 offered, both off two points on the session.

Also down a deuce, a distressed-bond trader said, were Solo Cup Co.'s 8½% notes due 2014, at 86 bid, 88 offered.

Asbestos bounces

The trader saw the asbestos names mostly on the upside, pegging the bonds of bankrupt Lancaster, Pa.-based floorcovering maker Armstrong two points higher at 71 bid, 73 offered, while bankrupt Toledo, Ohio-based Owens Corning was perhaps a point better at 85 bid, 87 offered. However, he did see bankrupt Southfield, Mich.-based automotive brake system maker Federal-Mogul's notes actually two points lower at 56 bid, 58 offered.

A trader at another desk said that Owens Corning's 7½% notes due 2018 were 1½ points better at 86 bid, 87, adding that "they were there all day. They were no doubt better."

It was the first time in a long time that anyone had used the words "better" and "asbestos bonds" in the same sentence. After having hit peak levels in late May when Owens Corning announced an agreement with its various creditor classes on a proposed reorganization plan - Owens Corning rose to around 122 bid, Armstrong to around 90 and Federal-Mogul to around 70 - the sector's bonds have been on the slide ever since, and earlier this week fell to below the levels they had occupied even before the agreement with the Owens Corning creditors. The slide was attributed to a combination of profit-taking from the prior gains and investor angst over the Washington bottleneck that a proposed $140 billion industry- and insurance-funded asbestos claims trust fund mechanism has run into. It's currently stalled in the Senate.

Market mostly little moved

But generally, such large movements were pretty rare on Thursday, traders said. More the norm were movements in a half-point range, up or down, from Wednesday's levels.

A trader saw GM's benchmark 8 3/8% notes due 2033 unchanged on the session, at 76 bid, 76.5 offered, while the Detroit giant's financing arm, General Motors Acceptance Corp.'s 8% notes due 2031 were half a point down at 93.5 bid, 94 offered.

He saw the bonds of bankrupt Troy, Mich.-based ex-GM subsidiary Delphi lower, with its 6.55% notes due 2006 down ¼ at 83.5 bid, 84.5 offered, while its 7 1/8% notes due 2029 lost ¾ point to 77.75 bid, 78.75 offered.

Bankrupt Toledo-based parts maker Dana's 5.85% notes due 2015 were unchanged at 75.5 bid, 76.25 offered, while its 7% notes due 2028 were half a point down at 76.5 bid, 77.5 offered.

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