Harrah's bonds better on asset-sale reports; GM up, auto-parts seen better; financials fade

By Paul Deckelman and Sara Rosenberg

New York, April 23 - Harrah's Operating Co. Inc. bonds were seen trading better in late-session dealings on Friday, spurred on by news reports that what by many estimates is the world's largest casino company is reportedly shopping one of its Las Vegas casino properties around to prospective buyers, and could get as much as half a billion dollars for it.

Elsewhere, Smurfit-Stone Container Corp.'s bonds were quoted higher, although no fresh news was seen out about the bankrupt paper packaging company. Sector peer NewPage Corp.'s bonds were seen little changed, but holding at lower levels versus earlier in the week.

Troubled financial names such as MBIA Inc. and Radian Group, Inc. were being quoted lower, though on little real activity and no fresh news out on either bond insurer.

General Motors Corp.'s bonds were seen having edged their way up on the session, while sector peer Ford Motor Co.'s benchmark issue was seen little changed.

Traders were seeing strength in such automotive component names as ArvinMeritor Inc. and Cooper-Standard Automotive Inc. - the latter company while shopping a new bond deal around.

Another Midwestern industrial manufacturing name, Park-Ohio Holdings Corp.'s bonds, also continued a firming trend on no apparent news.

Activity in the distressed-debt segment of the bank debt market was muted Friday.

Back among the bonds, a distressed trader said that it was "a little weird and kind of boring" on a day which saw the larger junk bond market still dominated by dealings in newly priced paper. "I did not make many revisions in my sheet."

He also acknowledged that "yeah, it's tough" being a distressed-debt trader at a time when bonds of most distressed companies - and even those of companies which are in bankruptcy proceedings - are trading close to, or even above, par.

"When stuff is long-term, we're just selling it out."

Harrah's higher on asset-sale talk

A market source saw Harrah's Operating Co.'s 10% guaranteed senior secured second-priority notes due 2018 trading in an 86-88 context all day before going out at 86¾ - off the high but still up more than a point on the session, in fairly brisk dealings, with over $21 million of the Las Vegas gaming giant's bonds changing hands.

A trader cited "rumors that Harrah's paper is going to take off" on news that it is looking at a possible asset sale - it's Rio All-Suite Hotel & Casino in Las Vegas.

He said that when the news broke late in the afternoon, "everyone was looking for offerings, so there's a little scrambling going on. We'll see what happens on Monday."

Bloomberg News, attributing its information to unidentified sources said to be close to the situation, reported that Starwood Capital Group LLC and Colony Capital LLC are among the companies that are weighing bids for the resort, which is located near, though not actually on, the famous Las Vegas Strip near Harrah's largest Vegas property, the Caesar's Palace casino resort. The news services said that some bids value the Rio at about $500 million. It said that Harrah's, Starwood Capital and Colony all declined comment on the story.

Casino Gambling Web, a gaming industry website, reported that "several investment companies have already shown interest" in the Rio, which has 1,100 slot machines, 90 gaming tables and 2,520 rooms.

If Harrah's does sell the Rio, it would follow by several weeks its acquisition of Planet Hollywood's Las Vegas Strip operations. Harrah's is in a financially stronger position to pursue such acquisitions after having cut its debt by $4.2 billion in 2009 by offering creditors new bonds at a discount in exchange for their old ones, while extending maturities on another $5.5 billion this year.

NewPage steady, Smurfit higher

Among the paper and packaging names, a trader said that NewPage Corp.'s 10% notes due 2012 were "pretty much unchanged" around 70 bid, 72 offered, having come in from levels earlier in the week in the mid-70s.

He saw Smurfit-Stone Container Corp.'s several series of bonds at around 92-93. He said there was "some trading, not a lot" in the Chicago-based packaging company's issues.

'It's the same quote as [Thursday], but the trades were at the 93 level, so it's up ½ to 1 point, on some volume."

He saw the company's 8% notes due 2017 up ½ point at 93 1/8 bid.

"So there was some activity, up ½ point to a point, on the Smurfits."

There was no fresh news out on the company, currently undergoing reorganization.

Six Flags eases

A trader saw Six Flags Inc.'s bonds get "a little easier," quoting the bankrupt New York-based theme park operator's issues, like its 9 5/8% notes due 2014 in a 29-31 context, allowing that there was "more quoting than trading. That's the quote - lower than what it was at the beginning of the week.

"But I didn't see a lot of activity."

Financials drift lower

A trader saw MBIA Inc.'s 14% surplus notes due 2033 at 73½ bid, 74½ offered. "That's drifted down all week," he said of the New York-based bond insurer's paper. "It's down on the week - but not today. [Thursday] and today, they were all in the same place."

Among other financial names, the trader saw Radian Group Inc.'s bonds quoted lower, with the Philadelphia-based bond insurer and mortgage insurance co.'s 5 3/8% notes due 2013 off a point at 93 bid, 95 offered.

"I did not see activity in it," he said. "Quoted lower, but no activity," although he noted that "they did race up at the beginning of the week," gaining about 4 or 5 points, "and then they settled back down."

GM moves up

A trader saw General Motors Corp.'s benchmark 8 3/8% bonds due 2033 trading all day within a 37-38 context, a little higher than recent levels, with the bonds going out at 37 7/8 bid, which he called up a point on the day.

He saw GM domestic arch-rival Ford Motor Co.'s 7.45% bonds due 2045 unchanged at 92 bid, 93 offered, opining "there's nothing there."

Another trader saw the GM benchmark issue up ½ point at 37 ½ bid, 38 offered, while Ford's long bond was up ¼ point at 93 bid, 94 offered

Auto component companies climbing

Also in that sector, a trader said that ArvinMeritor Inc.'s bonds "are on a roll," seeing the Troy, Mich.-based automotive components company's 8 1/8% senior subordinated notes due 2015 at 98¼ bid, 99 offered, remarking: "I haven't seen those numbers in a while." The bonds were essentially unchanged from the levels they had held in Thursday's dealings, but up from the mid-90s at the beginning of the month.

ArvinMeritor recently announced that its plans for gradually getting out of the passenger car parts business - so it can focus on the potentially more stable market for commercial vehicles like trucks and buses - is on schedule. The company sold most of its unprofitable car parts units last year in order to cut its dependence on the more volatile passenger car market and instead concentrate on supplying parts to commercial vehicle manufacturers.

It expects to sell the last remnants of its car parts business by the end of this year, claiming in a statement that it has s received a "great deal of interest" from potential buyers for its light-vehicle body systems unit, which makes roofs and door panels.

The light-vehicle supply operations - which earlier in the decade represented most of ArvinMeritor's revenue base - accounted for just 30% of ArvinMeritor's $1.1 billion sales in the 2009 fourth-quarter period.

A trader said that Cooper-Standard Automotive Inc.'s 8 3/8% notes due 2014 "have been moving up every day - they closed today at 78, up about 4 points," and well up from the levels in the upper 60s to around 70 seen in the market last week, although he noted that the bonds of the Novi, Mich.-based automotive components company are trading flat, or without their accrued interest.

"That whole sector is hot," he declared.

Earlier this week, high yield syndicate sources heard that the company was shopping a $450 million offering of new eight-year senior notes via a roadshow that runs through this coming Thursday, with proceeds to be used to repay its debtor-in-possession loan and other debt. Cooper-Standard filed for Chapter 11 protection last August with the U.S. Bankruptcy Court in Wilmington, Del., as a means of implementing a balance sheet restructuring.

Park Ohio pops up

A trader said that Park-Ohio Holdings Corp.'s 8 3/8% senior subordinated notes due 2014 - most recently seen in the 80s - have breached the psychologically significant 90 mark, quoting the bonds at 91¼ bid, 92½ offered - and observed that "I haven't seen that [kind of level] in a couple of years."

Another market source saw the bonds get as good as 93 bid on Friday - well up from the 871/2- 90 context in which the bonds had been trading on Thursday

There was no specific positive news out on the Cleveland-based industrial supply chain logistics and diversified manufacturing company that might explain its recent surge. Last fall, the bonds were trading in the 50s; by the beginning of this year, they had pushed their way up to around the mid-to-upper 70s, and to the upper 80s at the beginning of the month, apparently carried along by the overall junk market momentum, as well as investor sentiment that the gradually improving economy will see companies like Park Ohio - which among other things offers strategic planning, advanced technologies, global sourcing, technical services, parts and materials, logistics, distribution, inventory management, and program-implementation services to manufacturing companies - benefitting from an upswing in industrial activity.

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