Visteon hearing helps debt; MGM Mirage bonds inch up; LyondellBasell looks to exit bankruptcy

By Stephanie N. Rotondo

Portland, Ore., April 26 - The distressed debt market got off to a running start on Monday, with traders reporting an overall strength in the arena.

There was plenty of volume, plenty of stuff going on," a trader said.

However, he also noted that trading was in bits and pieces, more than good-sized chunks. "There is still a lot of recent new issues just turning over," he added.

Visteon Corp. saw its bonds improving with the rest of the market. One trader speculated that the company's confirmation hearing - which is currently under way - was also helping the give the debt a boost.

MGM Mirage paper also headed for higher ground during Monday's session. However, while Visteon was gaining in full points, MGM only saw fractional firmness.

In other news, LyondellBasell's plan of reorganization was confirmed last week. With the company set to exit bankruptcy by the end of the week, one market player believes that the credit will gain in popularity.

Visteon hearing helping debt

The acrimonious hearing to confirm its reorganization plan has helped to give Visteon's bonds a boost, according to a trader.

The trader said the 7% notes due 2014 "moved up a good bit on this hearing thing," seeing the notes hitting a high around 109.

Another trader also placed the 7% notes around the 109 mark, saying, "I think it's higher than where it has been by a couple of points."

The second trader also saw the 8¼% notes due 2010 gaining ground to around 105.

Shareholders are fighting Visteon's current plan, which leaves no recovery for them. In court papers filed last week, the shareholders argued that the plan's provision that gives company managers $237 million in new equity in the reorganized company makes them "unquestionably self-interested."

Shareholders are also claiming that the current valuation of the new company is too low. Visteon projects it will be worth about $2.37 billion, but shareholders - along with a group of unsecured creditors - believe it is worth more.

Under the plan, Visteon will give its lenders 85% of the company, thereby reducing its debt load upon emergence from bankruptcy. Another 10% will be slated to go to managers of the Van Buren Township, Mich.-based automotive parts supplier.

Elsewhere in the autosphere, General Motors Corp.'s benchmark 8 3/8% notes due 2033 rallied another point," a trader said, to 39 bid, 39½ offered.

MGM bonds inch up

MGM Mirage debt headed upward - though slightly - following the trend set by the company's equity.

A trader said "probably $20 million" of the 6 5/8% notes due 2015 changed hands at 86 3/8 bid, 87½ offered. He deemed that unchanged to "maybe a touch better."

At another desk, a trader called MGM paper up "maybe half a point" across the board. He saw the 13% notes due 2013 at 117 3/8 bid, 117½ offered.

The trader added that the 6 5/8% notes "traded into an 87 bid" late in the day.

"I think some more would have traded," he said. "I think the seller would have sold more."

MGM's stock (NYSE: MGM) meantime closed up nearly a buck to $16.64.

The gains in the capital structure came as Las Vegas Sands' announced a plan to set up a Singapore casino. Many casino operators have focused on the Asian markets recently, as the U.S. gambling arena has struggled with the financial crisis.

Las Vegas Sands' project is expected to be the second most expensive in the world. The first is MGM's own CityCenter project located in the heart of the Las Vegas Strip.

MGM will release quarterly results next week.

Lyondell looks to exit bankruptcy

LyondellBasell is slated to exit Chapter 11 protections on April 30, according to a press release and supporting court documents.

The news did little, however, to get the company's debt moving. One trader saw the 8% senior notes due 2016 with a 103 to 104 bid, noting "they have been in kind of that same context."

Another trader also said he saw little action in the name, but opined that it was "going to get huge as soon as this post-reorganization equity starts trading."

The Rotterdam, Netherlands-based chemical maker received approval of its plan of reorganization on April 23.

Upon emergence from bankruptcy, LyondellBasell will have about $5.2 billion of net consolidated debt. According to Gallogly, the reorganization plan "significantly de-levers our capital structure."

Energy Future heads up

A trader said Energy Future Holdings Inc.'s 11¼% notes due 2017 traded up about a point to "76 and change." That compared with levels around 75 on Friday.

There was no news out to explain the gains in the Huston-based energy provider.

Radian, PMI improve

A trader said that Radian Group Inc.'s bonds, such as the Philadelphia-based bond and mortgage insurer's 5 5/8% notes due 2013 were "also up a couple of points," quoting them at 96 bid, while sector peer PMI Group Inc.'s 6% notes due 2016 were at 86 bid, 88 offered. "They traded [at] both of those spots today," he said, adding that "it looks like they're up 3 points, at 86."

He said "PMI didn't have as much activity" as Radian did - "They're not that big an issuer. It's a smallish issue, not that much activity." However, he said that while Radian "is not that big an issue either, there was some activity in that name."

Paul Deckelman contributed to this article

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