GM gains ground; retailers get boost from sales data; casinos steady on Atlantic City numbers

By Stephanie N. Rotondo

Portland, Ore., June 11 - General Motors Corp.'s bonds had an up day Thursday and some sources opined that the moves were simply a matter of "someone moving things around."

However, news reports surfaced during the session, which stated that a small group of individual bondholders were planning to protest the company's plan to move its assets to a new company.

Also, a new retail sales report out Thursday showed consumers are slowly returning to shopping centers. The news helped some retailers, such as Neiman Marcus Group Inc., post gains in their bonds.

Monthly casino revenue numbers were also released from Atlantic City. The sector at large managed to shake off the continued losses the Jersey Shore casinos racked up and Harrah's Entertainment Inc. and MGM Mirage were holding in there.

"The whole business has just come full circle," a trader said, speaking to the lack of new names or ideas in the distressed arena. It is not the new ideas that make the money, but rather whether someone has something to buy or sell.

"We're at the mercy of what the clients want to do," he said. "And that's fine, I guess."

"There is no rhyme or reason in this market," he added.

GM bonds gain ground

General Motors' debt inched upward during Thursday's session.

"My guess is it was just someone moving things around," one trader speculated. He saw about $10 million of the benchmark 8 3/8% notes due 2033 trade at 12.5.

Another market source pegged both the 8 3/8% notes and the 7.2% notes due 2011 at 11 bid, 12 offered, while another placed the 8 3/8% notes at 12.25, up from 11.5.

News reports out Thursday said that a group of bondholders were planning to protest the Detroit automaker's sale of its assets to a spinoff company. Bankrupt Chrysler LLC made a similar move by selling off some of its brands to Fiat SpA.

The group is alleging that the sale is little more than a way to subvert the bankruptcy process and the subsequent reorganization plan confirmation.

However, the group, which does not include any institutional holders, still has to be recognized as an official committee. There are reportedly three members to the group, holding a total of $2.3 million of GM's $27 billion in debt. Still, those three members also are working on organizing another 1,500 bondholders, representing about $400 million of the company's overall bond debt. The group has created a web site, mainstreetbondholders.com, to reach out to those interested in joining their effort.

"Main Street Bondholders and GM Bondholders Unite have joined forces and will be working together to obtain legal representation for GM small bondholders in bankruptcy court," the site states. "Small bondholders Hal John, Mark Modica and Wade McGee will be leading the effort."

Retailers get help from data

New retail sales data showed an increase for May, though much of the gains were attributed to higher gas prices, which resulted in higher gas receipts.

But whatever the cause, retailers by and large saw their bonds improving on the day.

Neiman Marcus Group's debt rose about a point, traders reported. One deemed the 10 3/8% notes due 2015 at 65 bid, up nearly a point, while another called that issue unchanged, also around 65. But the second trader said that the 9% notes due 2015 earned about a point to close at 64.5 bid, 65 offered.

The second trader also saw Bon-Ton Stores Inc.'s 10¼% notes due 2014 rising to around 52. But Rite Aid Corp.'s notes were seen holding steady, the 9½% notes due 2017 at 67.5 bid, 68 offered.

Retail sales in the United States rose 0.5%, according to a monthly report published by the Commerce Department. That figure was still smaller than had been expected.

Breaking down the results, sales increased only 0.2%, excluding gasoline sales.

Also, April's sales were revised to a 0.2% decline, instead of a 0.4% decrease. March sales were down 1.2%, not 1.3% as previously stated.

Casinos holding tight

In another consumer-related sector, casinos were mostly steady as monthly figures from Atlantic City were released.

A trader said $10 million of Harrah's Entertainment's 10¾% notes due 2016 traded at 51, "maybe a little bit softer, but right where they have been."

Another source saw MGM Mirage's 6 5/8% notes due 2015 gaining a deuce to end at 69 bid.

Atlantic City yet again saw a decline in revenues in May, coming in at $351.3 million, a 15.4% drop year over year. MGM's joint venture with Boyd Gaming Corp., Borgata Hotel and Casino, saw the smallest decline, losing 3% revenue from the same month last year at $62 million.

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