Delphi debt blows up; Sea Containers plan no help, trader says; Burlington, Bon-Ton paper falls

By Stephanie N. Rotondo

Portland, Ore., Sept. 23 - While financials still kept the market going Tuesday, distressed bond traders said there was more going on outside of that sector during the session.

"Everything was active today," said a trader.

The trader called Delphi Corp., Young Broadcasting, Tousa Inc., Burlington Coat Factory Warehouse Corp. and Bon-Ton Stores Inc. the "losers of the day." However, there was very little news out in either of those names, leading the trader to point to the gyrations in the current climate.

"Volatility continues," he said.

Meanwhile, just one day after seeing its reorganization plan approved, Sea Containers Ltd.'s debt was mostly better on the day. But when asked, a trader said the plan's approval had little to nothing to do with the gains, as the proposal is largely considered negative for bondholders.

"It was another interesting day in paradise," said one source. With "no rhyme or reason" to the market's actions, "some stuff has really hung in there and some stuff has really been put upon," he added.

Delphi debt blows up

Automotive parts supplier Delphi saw its generically quoted debt down at least 4 points during Tuesday trading, traders reported.

One market source said the paper "got blown up," finishing the day around 12. Another source deemed the bonds down 4 points to 14.

In recent sessions, Delphi's bonds had been slowly creeping back up, hitting around 18 in the previous session. Even as former parent General Motors Corp. announced it would draw down the remaining balance of its revolving credit facility to maintain liquidity, Delphi held tight.

But on Tuesday, Delphi received approval to freeze its pension plans and replace the existing schemes with new ones. The approval came despite objections from unsecured creditors.

Still, the move could save GM some money. However, some of Delphi's creditors have not only objected to the pension plan, but also to GM's increased involvement in the quest to exit bankruptcy. Troy, Michigan-based Delphi and GM have agreed to revise agreements that would increase GM's financial contribution to $10.6 billion from $6 billion.

Meanwhile, GM and Ford Motor Co. once again saw their term loans move down in trading as the cash market in general was softer by about 1 to 2 points on the day, according to a trader.

General Motors, a Detroit-based automotive company, saw its term loan quoted at 70 bid, 71 offered, down from Monday's levels of 71 bid, 72 offered and Friday's levels of 73 bid, 75 offered, the trader said.

Ford, a Dearborn, Mich.-based automotive company, saw its term loan quoted at 69.75 bid, 71.75 offered, down from Monday's levels of 73 bid, 74 offered, and from Friday's levels of around 75 bid, 76 offered, the trader added.

On Monday, GM's term loan fell as investors reacted to news that the company is drawing down the remaining $3.5 billion of its $4.5 billion secured revolving credit facility, and Ford was said to have dropped in sympathy.

General Motors said that the draw is being done to maintain a high level of financial flexibility for its ongoing restructuring during the current uncertain times in the capital markets.

Sea Containers mostly better

Sea Containers' debt ended the day mostly better, but a trader said the recent approval of the company's disclosure statement had nothing to do with it.

The trader quoted the 10½% notes due 2012 at 47, up 2 points. Another called the 10½% notes, as well as the 10¾% notes that were to have come due in 2006, at 45 bid, up 3 points. But the 7 7/8% notes that were to have matured in February fell 6 points to 40.5 bid, while the 12½% notes due 2009 ended unchanged at 63.5 bid.

The Bermuda-based company received approval on its disclosure statement on Monday. A confirmation hearing is scheduled for Nov. 24 - just over two years since the company first filed for Chapter 11 protections.

Under the terms of the plan, Sea Containers' debtors will transfer their interests to a new company. Sea Containers will in turn receive all the equity in the new company to be distributed to the plan's creditors.

But a trader said the "approval was negative news," calling it "worst-case for bondholders."

Burlington, Bon-Ton paper falls

As forecasts call for a weak holiday retail season, both Burlington Coat Factory and Bon-Ton Stores saw their debt dip.

A trader saw Burlington's 11 1/8% notes due 2015 fall 3 points to 63, while Bon-Ton's 10¼% notes due 2014 slipped a deuce to 32.

According to the annual holiday report published by the National Retail Federation on Tuesday, sales growth this season is expected to come in at 2.2%, the lowest level since 2002's 1.3%. NRF expects total sales for November and December to hit $470.4 billion, not including auto sales, gas sales, restaurant or online sales.

Broad market mixed

Lehman Brothers Holdings Inc.'s senior paper remained in the 19 bid, 20 offered range seen on Monday.

Sprint Nextel Corp.'s 6% notes due 2016 traded actively yet again, staying in the 85 bid, 87 offered range they have been at for about two weeks, a trader said.

Harrah's Entertainment LLC's 10¾% notes due 2016 continue to drift, finishing the day at 57 bid, 57.5 offered.

Young Broadcasting's 10% notes due 2011, deemed a loser of the day by one trader, were seen at 25, down 5 points. But another source called the bonds up 1.5 points at 27 bid.

Tousa was another big loser, its 9% notes due 2010 slipping 5 points to 40. Another source, however, pegged the bonds at 44 bid, down only a point.

Realogy Corp.'s 10½% notes due 2014 closed around 50 on Tuesday, down from 58 on Friday.

Rafaella Apparel Group Inc.'s 11¼% notes due 2011 gained 3 points to end at 47.5. The company will release its quarterly results on Oct. 1.

Sara Rosenberg contributed to this article.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.