GMAC still draws some concerns; Visteon bonds weaker; Rental Services grinds higher on earnings

By Stephanie N. Rotondo

Portland, Ore., Nov. 4 - As Election Day finally came, the financial markets as a whole got some relief.

In distressed land, things were "infinitely better," a trader said.

"There was nothing that didn't trade better," he said. Everything, he added, except GMAC LLC.

The trader said that investor concerns about the company, along with still declining auto sales, continue to pressure the bonds. But some sources saw the debt gain during the session, while still others deemed the notes unchanged.

Meanwhile, Visteon Corp.'s bonds have continued to retreat after posting a wider quarterly loss last week. Still, traders said there was not much action in the name.

Following the broad market trend, Rental Services Corp.'s debt was "grinding higher," a trader said. The bonds have been inching upward since the company reported its earnings last week as well.

GMAC continues to be pressured

GMAC's debt closed the day weaker to unchanged to slightly better, depending on whom you asked Tuesday.

One trader said that investors were "still scared that [the company] may or may not pay off." He saw the 7¾% notes due 2010 at 74 bid, 75 offered, the 5.85% notes due 2009 at 91.5 bid, 92.5 offered, the 6¾% notes due 2014 at 49 bid, 50 offered, the 5 5/8% notes due 2009 at 82 bid, 83 offered - versus levels in the 90s last week - and the benchmark 8% notes due 2031 at 46 bid, 47 offered.

Another trader said the bonds "kind of popped, then leveled off," trading unchanged from the day before, but down about 10 points from last week. He pegged the 8% notes at 45 bid, 46 offered. The bonds had hit a high of 56 last week after the company said it was looking to get involved in the Federal Reserve's commercial paper plan.

Still, another source called the benchmark issue up 2 points on the day around 46.

GMAC, which is reportedly considering becoming a full-fledged bank in order to be eligible for more government funding, said Monday it was selling some of its units to better its cash position. The company said it sold its reinsurance business to Maiden Holdings Ltd. and has agreed to sell two of its insurance businesses to them as well. Details of the transaction were not released, but Maiden said it plans to raise $260 million in connection with the deal.

Visteon weaker

Last week, Visteon posted a wider third-quarter loss. Since then, the automotive parts supplier's bonds have been under pressure.

One trader saw the 8¼% notes due 2010 offered at 61 but called that number "too high," instead calling the bonds 54 bid, 57 offered. He also saw the 7% notes due 2014 around 20 and the 12¼% notes due 2016 around 30, both weaker.

However, he said there was not much action in the name.

Another market source deemed the 7% notes more than 3 points softer at 16 bid.

For the third quarter, Visteon posted a net loss of $188 million, compared with a net loss of $109 million the year before. Total sales declined to $2.11 billion from $2.55 billion.

Visteon is based in Van Buren Township, Mich.

RSC bonds grind higher

Rental Services' debt has been "kind of grinding higher," a trader said, since reporting seemingly positive numbers last week.

A trader placed the 9½% notes due 2014 around 62.5.

In the third quarter of 2008, RSC saw rental revenues gain 1.7%, while same store rental revenues moved up 1.8%. Free cash flow increased 62% to $94 million. The Scottsdale, Ariz.-based company also reaffirmed their outlook for full year earnings.

"While fleet on rent grew during the quarter, we chose to substantially reduce capex to support rate stability and maintain high utilization," Erik Olsson, president and chief executive officer, said in a prepared statement. "In line with this strategy, we delivered an impressive free cash flow for the quarter. Our priorities and business model remain the same in all marketplace conditions: Sustain rental rates, keep utilization high, maintain high profit margins and deliver strong cash flows.

"In tough market conditions, our employees remained disciplined and delivered strong results against tough comparisons. I am particularly proud that we excelled in virtually every measure critical to our customers: 97% on-time delivery of equipment, 98% current on manufacturers' suggested preventative maintenance and customer net promoter scores above 60%. Finally, our utilization of fleet was over 72% and, as expected, strengthened as the quarter progressed."

Broad market gains

In the media world, Univision Communications Inc.'s 9¾% notes due 2015 moved up to 24.5 bid, 25.5 offered, up from around 20 last week.

Nielsen Finance LLC, a wholly owned subsidiary of Nielsen Media Research Inc., saw its 0% variable discount notes due 2016 hit 42.

"That's new low," a trader said.

Meanwhile, VeraSun Energy Corp.'s 9 3/8% notes due 2017 continue to fall after the company entered Chapter 11 protections, placing the issue around 8.

Travelport LLC's 11 7/8% notes due 2016 slipped to 38, while Nuveen Investments Inc.'s 5% notes due 2010 hit 33, "their low-water mark," according to a trader.

Rite Aid Corp.'s 10 3/8% notes due 2016 were seen firming to 76 bid, 78 offered, while the 8 5/8% notes due 2015 gained more than 3 points to close at 39.5 bid.

A trader saw Lazard Group's 6.85% notes due 2017 down almost 12 points, at 66 bid, versus 77.5 the last time the bonds traded in round lots a week ago. He said that the company put out its 10-Q report Monday night, "and there must be something not really good in the Q," in trying to find a reason for the slide.

He also noted that Lazard's stock was up a point on the day despite the presumed bad news, adding that "nobody gets penalized in a market like this."

Idearc Inc.'s 8% notes due 2016 gained a point to 15 bid.

A trader saw Charter Communications Inc.'s 8 3/8% notes due 2014 at 70 bid, 73 offered, while its 10% notes due 2014 improved 2 points to 25 bid. Charter's 8% notes due 2012 firmed nearly 2 points on the day to 79.25.

Pilgrim's Pride Corp.'s 7 5/8% notes due 2015 fell 2 points, to 32.5.

Paul Deckelman contributed to this article.

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