Delphi bonds attempt to rally; Thornburg notes rebound; James River dips; Hines lower

By Stephanie N. Rotondo

Portland, Ore., Aug. 17 - The distressed credit market turned quiet Friday, despite a Federal Reserve discount rate cut that helped the struggling equity market recover.

"The market tried to rally," a trader said. Still, he said, there was "no follow through today."

"It was Friday of a fairly volatile week," a trader said of the last day of the trading week. "The market seems tired."

Some traders were all ready gearing up for the next week.

"Hopefully, it will be better next week, as far as finding things to trade," a trader said.

While the day was characterized as quiet with low volume, the bonds of Delphi Corp. and Thornburg Mortgage, Inc. bonds were seen as the most active.

Both names had been smacked down in the previous session, though for different reasons.

Delphi's debt was seen weakening on rumor that there was a large seller unloading his position. Thornburg, on the other hand, was experiencing some of the woes that had leaked from the subprime mortgage market.

Still, Delphi's bonds attempted to rally during trading Friday, while Thornburg also pushed higher at the close of the week.

Meanwhile, James River Coal Co.'s bonds were deemed lower, but no one knew what was driving the coal producer's debt down.

As many market players are figuring out who might be next to file for bankruptcy, one trader said Hines Horticulture Inc. was making the list. The nursery supplier's bonds slowly - and quietly - edged lower during the week, ending up down at least 3 points.

Delphi gains, then eases

Delphi's bonds attempted to rally, a trader said, after the bonds had gotten whacked in the previous session.

The trader said the 6.55% notes due 2006 traded earlier in the day at 93 bid, 94 offered. They fell back slightly to 92 bid, 92.5 offered, still up 1 point on the day.

Another trader said the bonds were "unchanged from last night," with most of the automotive parts supplier's paper moving in the 92 context.

The trader attributed the previous losses to "one big seller." He added that position liquidation was possible.

He said that the market had some concerns about whether the company's exit plan would go through, or if it would "blow up." Still, he saw general market pressure as the main reason for the dip.

"But it seems to have stabilized," he added.

At another desk, a trader said the 6.55% bonds were a point better at 92 bid, 93 offered on the news that the company had reached an agreement with its steelworker unions.

Elsewhere in the autosphere, Dana Corp.'s bonds were "down a couple," a trader said, with the 6½% notes due 2008 down to 78 bid, 80 offered from 80.5 bid, 82/5 offered.

Thornburg rebounds

A trader said Thornburg Mortgage "continues to rebound," gaining 10 points on the day.

The trader pegged the 8% notes due 2013 in the mid-70s.

At another desk, a trader said the bonds were at 75 bid, 78 offered, up from 70 bid, 72 offered.

Another trader said "Thornburg had a pretty good run," with the bonds at 74 bid, 76 offered, up from 65.5 bid, 66 offered on Thursday, "a pretty good move," noting that the company's shares moved solidly upward as well.

Elsewhere, another trader called the bonds up 9 points at 73 bid, 75 offered.

The company's bonds were beat down earlier in the week, as several analysts downgraded the company. Positive comments from company management, however, pared some of the losses in the latter part of the week.

On Thursday, the company said it had entered a silent period and was expecting to make an announcement during the upcoming week.

James River lower

Industrial-grade steam and coal producer James River Coal saw its bonds edge lower on the final day of trading, but it was unclear why.

A trader saw the 9 3/8% notes due 2012 trade lower to 69 then to 68, though he did not know if someone "was punting or what."

Another trader said he saw the bonds at 67 bid, looking for an offer.

Market sees Chapter 11 in Hines' future

Hines Horticulture's debt has been moving lower of late, prompting some in the market to feel that a bankruptcy is looming.

A trader said the 10¼% notes due 2011 were seen earlier in the week at 75. As of Thursday, the bonds had fallen to 72, though the trader noted that the bonds did not trade during Friday's quiet session.

"The longer things go on without anything changing, the more people think [the company] will go belly up," the trader said.

The nursery supplier filed a 10-Q NT with the Securities and Exchange Commission Wednesday. That same day, the company received a limited waiver with its lenders, allowing the company until Aug. 31 to file its financial report.

Homebuilders mostly better

Technical Olympic USA Inc.'s 9% notes due 2012 were called down about a point at 73.

Another trader saw the homebuilder's 8¼% notes due 2011 up 3 points to 71 bid, 73 offered. Meanwhile, a trader said the 10 3/8% notes due 2012 were up 4 points to 44.5 bid, 46.5 offered.

Among other homebuilder names, he saw Beazer Homes USA Inc.'s 8 1/8% notes due 2016 a point better at 81 bid, 82 offered, and saw Hovnanian Enterprises Inc.'s 8 5/8% notes due 2017 at 79 bid, 80 offered, up a point.

Linens n'Things' floating-rate notes were called unchanged at 64 bid, 64.5 offered, while Tembec Inc.'s 8½% notes due 2011 were seen trading at 44.125.

"That's about right," a trader said.

Meanwhile, Fedders Corp.'s 9 7/8% notes due 2014 were weaker at 18.25. Another trader called the bonds unchanged at 22 bid, 24 offered.

Bally Total Fitness Holding Corp.'s 9 7/8% due this fall were seen at 88 bid, 90 offered, up from 85 bid, 87 offered on Thursday.

Medquest Inc.'s 11 7/8% notes due 2012, "a big mover over the last few days [since MQ's planned sale was announced]," were down a point at 97 bid, 99 offered.

Trump Entertainment Resorts Inc.'s 8½% notes due 2015 were up 3 points at 81 bid, 82 offered.

Paul Deckelman contributed to this article.

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