Station Casinos gets boost from exchange offer; GM, Ford mostly better; Blockbuster bonds move higher

By Stephanie N. Rotondo

Portland, Ore., Nov. 26 - Distressed bond traders prepared for an early close Wednesday and, as a result, volumes were somewhat light.

Still, some market players said they were keeping busy.

"The days before and after holidays are kind of busy because there are half as many people around," one trader said. But he added that "everybody's ready" for the early shutdown, especially as the market was holding its ground. If the market continued to remain positive, he said, traders could spend the holiday weekend "not feeling like the world is over."

Station Casinos Inc.'s bonds held on to their late Tuesday gains and, in some cases, added a bit more, traders reported. The casino operator had announced an exchange offer Tuesday, thus the movement in the debt.

Meanwhile, an overall better cash market was given credit for boosting General Motors Corp. and Ford Motor Co.'s term loans. But bond traders saw GM's corporate debt virtually unchanged, while Ford's seemed to inch higher.

Blockbuster Inc.'s paper also gained some ground during trading. The gains followed the company's announcement Tuesday that it would release an on-demand digital media service.

The market will be closed Thursday for Thanksgiving. Traders said they were preparing for a rather quiet Friday, as well.

Station gets boost

Station Casinos, which had moved up late Tuesday on the news of an exchange offer, held on to their gains during Wednesday's short session.

A trader quoted the 6% notes due 2012 at 29 bid, 30 offered, which he called 3 to 5 points better. The 6 7/8% notes due 2016 and the 6½% notes due 2014 were a point or two better at 9 bid, 10 offered.

Another trader placed the 7¾% notes due 2016 at 31 bid, 32 offered, up from 30 the day before. He also saw the 6% notes at 31 bid, 32 offered, up from 24.5 previously.

The Las Vegas-based gaming operator announced Tuesday that it had begun a private exchange offer for holders of its 6% notes, 7¾% notes, 6½% notes, 6 7/8% notes and its 6 5/8% notes due 2018. In exchange for the old debt, bondholders would receive new 10% senior secured term loans due 2016 and 10% junior secured term loans due 2016.

Furthermore, Station's owners are considering infusing $450 million to $500 million of their own money in an attempt to keep the company afloat.

In the rest of the gaming world, Trump Entertainment Resorts Inc.'s 8½% notes due 2015 were called unchanged at 14.5 bid, 15.5 offered.

A market source saw MGM Mirage's 6 5/8% notes due 2015 at 52 bid, up 3.5 points, while Harrah's Entertainment LLC's 5¾% notes due 2017 gained about half that to close at 15.5 bid.

GM, Ford debt mostly better

GM and Ford both saw their term loans move up on Wednesday as cash generically felt better, according to a trader.

General Motors, a Detroit-based automotive manufacturer, saw its term loan quoted at 39.5 bid, 41.5 offered, up from Tuesday's levels of 36.5 bid, 38.5 offered, the trader remarked.

And, Ford, a Dearborn, Mich.-based automaker, saw its term loan quoted at 40 bid, 42 offered, up from 37 bid, 39 offered, the trader continued.

The trader remarked that there was really no reason for the auto names to be up by a couple of points on the day other than the sentiment in the general cash market was pretty positive. He labeled cash overall as being up by about a point, while adding that there was little to no volume because it was a shortened pre-holiday session.

In the bonds, a trader deemed GM's debt largely unchanged. He saw the 7.20% notes due 2011 at 23 bid, 24 offered, the 6¾% notes due 2028 at 14.5 bid, 15.5 offered, the 7¾% notes due 2036 at 10 bid, 11 offered and the benchmark 8 3/8% notes due 2033 at 17 bid, 19 offered.

The trader also called GMAC LLC's debt about the same, its 6¾% notes due 2014 at 30 bid, 32 offered, its benchmark 8% notes due 2031 at 25 bid, 26 offered and its 7½% notes due 2016 at 13 bid, 15 offered.

Ford's paper, however, gained some during the session. He said the 4¼% notes due 2036 were up about 3 points, trading in the 23 to 25 range. The 8% notes due 2016 were also "up a couple" at 41 bid, 43 offered.

The automakers' debt structures might have been held up by the belief that a federal bailout might actually happen. Deutsche Bank analyst Rod Lache put out a report that indicated the tide was turning and a recent bailout of Citigroup only aided the Big Three's cause.

In auto related names, American Axle and Manufacturing Inc.'s 7 7/8% notes due 2017 traded actively in a 24 to 26 range.

Blockbuster gains

Blockbuster's bonds gained as much as 3 points on the day, traders reported. The boost came after the company announced that it was launching an on-demand video service similar to AppleTV.

A trader saw the 9% notes due 2012 hit a high of 50, while another pegged the bonds at 49 bid, 50 offered.

Blockbuster said on Tuesday that it had partnered with San Jose-based 2Wire, a broadband provider, to create the compact digital media player. Like TiVo, customers can choose their movies and watch them immediately, or save them for later.

No subscription is required for the service and the player is available free to customers who purchase 25 rentals for $99 in advance. Rentals will cost $1.99 to $3.99.

Among other retailers, a trader called Rite Aid Corp.'s 10 3/8% notes due 2016 "up a few points" at 6 7bid, 68 offered. Another source saw Rite Aid's 8 5/8% notes due 2015 at 29 bid, 3 points firmer.

Neiman Marcus Group Inc.'s 9% notes due 2015 also gained 3 points to close at 43 bid.

Sara Rosenberg contributed to this article.

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