GM gains more, Ford Credit backtracks; trading in new, old Clear Channel drops; primary on hold

By Paul Deckelman and Paul A. Harris

New York, Dec. 22 - General Motors Corp.'s bonds continued to firm on Tuesday during an otherwise unremarkable session which saw slow and largely featureless trading. The carmaker's paper was seen having gotten a lift from its news earlier in the week that a new cost-cutting-minded chief financial officer had been hired - and could ultimately be in line for the top job at the company.

Ford Motor Credit Co.'s recent new issue, and its existing bonds, were meantime seen lower, though on no news.

Market interest in Clear Channel Worldwide Holdings Inc.'s new bonds seemed to have waned, and there was not much doing in the Texas media company's until recently busy existing notes either.

There seemed to still be some buying interest in the new 7% notes of CIT Group Inc., five different series of which were issued when the New York-based commercial lender emerged from Chapter 11 protection earlier this month.

Overall, traders said that market players seemed to be just going through the motions, with absolutely no sense of urgency about buying or selling anything, with the holidays looming, the primary calendar essentially cleared and many participants having already closed their books for the year and preparing to go on vacation.

There were no developments seen in a primary market finally taking a rest after a remarkable, record-breaking new issuance year.

Clear Channel little seen

For the first time in over a week, Clear Channel Communications Inc.'s various bonds, old and new, were not a major factor at all in Junkbondland.

The San Antonio, Tex.-based outdoor advertising and broadcasting company's existing issues, for instance - which had started moving solidly upward in early December first on speculation and later on actual news of its big new bond deal, continued to firm steadily until the new issue finally priced last Friday and then started during Friday's session and Monday's to come down off their pre-pricing peaks as investors sold out of the existing bonds to play the new deal - were seen little traded on Tuesday.

"It's all the new issue," a trader lamented. "The new issue took over the activity."

He said there was "not much trading" of the existing 10¾% notes due 2016, as "a couple of million bonds traded today" in a 78-79 context, which he called down a point and change from Monday's levels, which in turn were below the 80-81 context in which those bonds had traded last week. "There was not much activity" in the existing notes, he reiterated. "I would look toward the new issue, that's where all of the action is, I'm sure."

He said the 11% PIK toggle notes due 2016 were also "virtually unchanged, no volume, just a couple of bonds, one or two trades" in the lower 70s, down from recent highs in the 75 area.

A market source meantime saw Clear Channel's 7¼% bonds due 2027 trading just under 50, off 1½ points.

"So forget these - it's all the new issues" the first trader said. "These things were set up for the new issues, and that's where the action is."

Maybe so - but another trader declared that he "did not see a single thing today" in the new Clear Channel Worldwide Holdings 9¼% notes due 2017, $2.5 billion of which had priced in two tranches at par on Friday, and when had then firmed smartly in the aftermarket and on Monday, the $500 million A tranche ultimately to levels between 102 and 103 and the $2 billion B tranche to between 103 and 104.

He said that "very early in the morning" Tuesday - perhaps around 8 a.m. ET, before the market's opening - he saw the more liquid and thus relatively more popular B tranche bonds being quoted around 1033/4-104, about the same level those bonds had moved at on Monday, "but that was the very last thing we saw" in the credit.

Recent Ford Credit bonds fall back

Ford Motor Credit's 8 1/8% notes due 2020, which had priced on Dec. 7, were reported by a market participant to have retreated more than 2 points on the session on Tuesday to 98 5/8 bid, from prior levels around 101. Trading was relatively busy, with over $12 million of the new bonds seen having changed hands.

The company - the auto loan financing arm of Number-Two U.S. carmaker Ford Motor Co. - priced $750 million of the 8 1/8s at 98.304 to yield 8 3/8%. After a few sessions of trading below issue, the bonds finally began to move back up, ultimately edging above par to hit the 101 level at which they had traded before Tuesday.

Also busy were Ford Credit's established 7¼% notes due 2011, which lost about a half-point to end just under the 101 mark.

No negative news was seen out about Ford or its credit arm on Tuesday that might explain the price movements.

However, there could be some positive news coming out of Ford's headquarters in Dearborn, Mich., perhaps as early as Wednesday, with The Wall Street Journal reporting Tuesday after the market close that Ford was set to announce progress in its effort to sell is unprofitable Volvo line of Swedish-made cars to Chinese automaker Geely. The paper, attributing its information to unidentified sources "familiar with the matter," said that Ford could announce that "major hurdles" have been cleared, paving the way for a complete sale of Volvo to Geely by early 2010.

Market indicators up again

Among statistical measures of market performance, a trader saw the CDX Series 13 index up ¼ point on Tuesday to 99¼ bid, 99¾ offered, after having risen by ¾ point on both Friday and on Monday.

The KDP High Yield Daily Index meanwhile was up by 10 basis points on Tuesday at 70.95, after having risen 4 bps on Monday. Its yield narrowed by 2 bps to 8.14%, after having also come in by 2 bps the previous session.

In the broader market, advancing issues again led decliners on Tuesday, for a 16h straight session, by a better than seven-to-six margin.

Overall market activity, as measured by dollar volume, rose 15% from Monday's sedated pace.

"There was a little piece here, a little piece there," a trader said of the day's action. "It was very, very light."

Noting the fact that "more than 50%" of the people he normally communicates with by sending messages to them over the Bloomberg system had red indicator lights glowing next to their names, meaning they were not in the office, he surmised that "a lot of people took this week off."

Of the trading which did go on, he continued, "there were just a handful of little one-off situations going on. If anything happened, it happened early. People came in, they did their trades, and then they went Christmas shopping.

"And we will probably see more of the same [Wednesday] and Thursday."

GM bonds continue upside ride

One of the relatively few bonds which traded with any General Motors, up again on apparent continued positive response to the Detroit-based Number-One U.S. carmaker's choice of a respected veteran financial man, Chris Liddell, heretofore the CFO at software king Microsoft Corp., to assume the same post at GM.

A trader saw GM's benchmark 8 3/8% bonds due 2033 up about a point on the day at 27 bid.

"GM did get higher," he said. "GM is lovin' life."

He saw "decent volume" in the benchmark bonds.

However, another trader, while seeing the bonds north of 27 and agreeing that GM "seemed like it traded up," said that there had been "not a huge amount" of trading, estimating turnover of around $6 million, as the bonds moved between 26¾ and 271/4.

CIT paper still popping

In the financial arena, CIT Group's five tranches of recently issued 7% notes, due between 2013 and 2017, continued to firm, nearly two week after they were issued upon the company's Dec. 10 emergence from bankruptcy.

A market source said that the 2013 notes gained more than a point on the day to end above 92 bid, while the 2014 issue closed just below 90, up nearly a point on the day.

Among the longer bonds in that new issue, the 2015 notes were the biggest winner, up more than 3 points to around the 87 bid mark. The 2016 and 2017 bonds each gained around a half-point, to end around the 85 level.

Also among the financials, bonds of American International Group Inc.'s aircraft leasing unit, International Lease Finance Corp., were seen mixed on Tuesday, following their retreat Monday in the wake of a threatened ratings downgrade from Baa3 to B1 by Moody's Investors Service.

A trader saw ILFC'S 5% notes due 2010 up nearly 2 points on the day to the 98½ bid level. However, its 4¾% notes due 2012 dropped by more than 2 points to around the 84 level. Volume in both was fairly busy for a relatively inactive day.

Amkor unmoved despite guidance

A trader said that "virtually nothing" traded in Amkor Technology Inc., even thought the Chandler, Ariz.-based provider of services to the semiconductor industry raised its fourth-quarter guidance, citing higher higher-than-expected demand for its semiconductor assembly and testing services.

He saw one or two trades in the 7¾% notes due 2013 at 102, including one round-lot transaction. He said the bonds were up around ¼ point from the most recent previous levels, seen last week.

Trucker YRC gains on debt deal

A trader said that he "didn't see as many quotes as there were [Monday]" in the 8½% notes due 2010 of YRC Worldwide's US Freightways subsidiary. He pegged the bonds around the 581/2-59 bid area, which he said was up by 2 points.

"There wasn't much trading in them, but it was quoted 2 points higher," he said, with the paper likely given a boost by the news that the Overland Park, Kan.-based trucking company - currently trying desperately to get its bondholders to support a pending debt exchange that would give them newer bonds for their existing notes - had gotten the approval of its senior lenders and pension funds for lowering the minimum tender threshold for the offer, which has only attracted the support so far of about 75% of the holders of the 2010 bonds and several series of convertible notes, far less than the originally stipulated 95%.

Six Flags shows some strength

A trader said he saw Six Flags Inc.'s bonds, such as its 4½% notes due 2015, "up early this morning," trading around 28½ bid, 29½ offered, and said the bonds got as high as 29 bid, 30 offered. He said that all of the bankrupt New York-based theme park operator's bonds trade around the same level. He said there was "some active trading" in the 41/2s, which he said ended at 29 bid, up ½ point, "so they were feeling better there."

There was no fresh news seen out on the company, some of whose bondholders are seeing to challenge the official company reorganization plan when confirmation hearings begin in March. Discovery proceedings and other pre-trial maneuvers will begin next month.

Tronox trades up as Huntsman deal dropped

A trader said that Tronox Worldwide LLC's 's 9 ½% notes due 2012 traded in "a high 77-79 range," and ended up around 78 bid, which he called up 2 points on the day on "a little trading, not much trading.

"Up a couple of points, on not much volume," even as A New York bankruptcy judge okayed the company's emergency request to access DIP and exit financing provided by Goldman Sachs & Co., after Tronox demonstrated that a failure to approve the financing plan might lead the bank to withdraw its offer by a Dec. 24th deadline, which would endanger the overall restructuring effort.

Huntsman Corp. meantime on Tuesday withdrew its court motion demanding that Tronox proceed with a scheduled auction of its assets, at which Huntsman, which has offered $415 million, was to have been the lead bidder. Tronox said it had another plan for restructuring when it cancelled the auction, and indicated that it will pay the required breakup fee to Huntsman.

Primary quiet

As expected, the primary market generated no news on Tuesday, as high-yield moves into holiday mode.

Heading into the last full session before Christmas, only one deal is thought to be a possibility.

Birch Communications, Inc. began a roadshow for its $100 million offering of six-year senior secured notes (B3/CCC+) early in the month, and remains in the market, according to an informed source.

However high-yield observers say that the chances of getting anything done in the primary market before the beginning of the New Year are becoming increasingly slim.

Proceeds from the Birch Communications deal, which is being led by Knight Libertas Capital Group, will be used to repay outstanding debt, to purchase outstanding warrants for its common stock and for general corporate purposes, including future acquisitions.

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