ResCap, GMAC switch courses; Burlington steady, Linens slips; Univision debt structure gains

By Stephanie N. Rotondo

Portland, Ore., April 29 - Residential Capital LLC saw things turn around in its favor Tuesday as its previously declining bonds reversed their course.

However, GMAC LLC's paper slipped during trading hours, coming on the back of the company's quarterly conference call. The company posted a wider loss for the first quarter but reiterated its commitment to help keep its floundering offspring afloat.

Meanwhile, the Consumer Confidence Index hit its lowest point in five years. Still, distressed retailers managed to hang on. Burlington Coat Factory Warehouse Corp.'s bonds closed the day essentially unchanged. However, Linens n'Things Inc.'s debt continued to edge lower after slipping in the previous session.

In the bank debt arena, Univision Communications Inc.'s paper ended higher as the company's legal battle with Televisa was put on hold. The delay in the ongoing trial made some speculate that a settlement was in the works.

Activity market-wide was still relatively light, as market players awaited the Federal Reserve decision on interest rate cuts. It is expected that the central bank will cut rates by a quarter percentage point, adding to the several cuts that have been made since the beginning of the year. The Fed is slated to issue a statement at 2:15 p.m. ET on Wednesday.

ResCap, GMAC switch courses

After several sessions of declines, Residential Capital's paper rebounded some Tuesday.

A trader said the Bloomington, Minn.-based mortgage lender's debt was at least a point better on the day, pegging the 6 3/8% notes due 2010 "up a couple" at around 52. At another desk, a trader saw that issue at 51.5 bid, 52.5 offered. The second trader also saw the 6 1/8% notes due 2008 at 82.5 bid, 83.5 offered, the 14% notes due 2013 at 49 bid and the 6½% notes due 2012 at 49 bid, 49.5 offered.

Another source placed ResCap's 8 7/8% notes due 2015 a point firmer at 49 bid.

Another trader called the 6½% notes "actually up 2 points" to 49 bid, 50 offered even though the troubled mortgage company lost $859 million in the first quarter and has considerable near-term liquidity challenges, including $17 billion of maturing 2008 debt, according its corporate parent. Yet another trader saw the 2013 paper up half a point to 1 point at 49.

But while ResCap paper was recovering slightly from its recent losses, its parent company was not faring as well.

One trader said GMAC's bonds were "a little lower," the benchmark 8% notes due 2031 at around 75.5. Another market source quoted those bonds down a point, also at 75.5. Yet another source pegged the 6 7/8% notes due 2012 at 80.5, down a deuce. Another trader saw the 8% bonds down 1.5 points at 74.5 bid, 75.5 offered.

The price action in the two companies came on the back of GMAC's quarterly conference call. GMAC will release its earnings statement on Wednesday.

During the call, company executives reported a $589 million loss for the first quarter, noting that it might not turn a profit during 2008. The wider loss included an $859 million loss from the ResCap unit.

GMAC has continued to funnel money into its struggling offspring. Most recently, GMAC secured a $750 million credit facility - of which ResCap drew down more than $450 million almost immediately. In the call, GMAC management indicated that it was not through supporting the subsidiary.

GMAC will continue to bolster ResCap as long "as it doesn't imperil the broader franchise," Robert Hull, chief financial officer, said in the call. "We haven't come to that point."

Further, Hull said that GMAC is in talks with its banks regarding a refinancing deal that would cover both companies.

"We see great value at ResCap," he said. "We have assets at ResCap we'd like to liquidate, but we aren't going to do it at fire-sale prices."

Elsewhere in the financial sector, news of an Securities and Exchange Commission probe into its restated financials did little to hurt Thornburg Mortgage Corp.'s bonds.

A trader said the 8% notes due 2013 remained in the high-70s, while another pegged the issue at 78.5 bid, 79.5 offered, up 1 point.

Thornburg was served an SEC notice on April 4, according to a regulatory filing. The Santa Fe, N.M.-based company said it is cooperating with the investigation.

The company also said that it is cooperating with a New York Stock Exchange review regarding the trading of the company's stock prior to Jan. 9.

Retailers shrug off data

Yet another disappointing reading on consumer confidence did little to upset distressed retailers.

Burlington Coat Factory's 11 1/8% notes due 2015 closed virtually unchanged, as one trader pegged the notes at 84.5 bid, 85 offered and another placed the debt at around 84 bid.

"That's pretty much where they have been, kind of," the second trader said.

Linens n'Things' floating-rate notes due 2014 continued to slide, however. The bonds, which had run up over the last couple weeks, reversed their course on Monday. A trader called the bonds down a little more during Tuesday's session, ending around 44.5.

Elsewhere, Claire's Stores Inc.'s 9¼% notes due 2015 were up a point at 69.25 bid, and Finlay Fine Jewelry's 8 3/8% notes due 2012 were seen down 1.25 points at around 44.

Still, traders noted that there was not a lot of activity in the sector overall, or in the market as a whole. One source speculated that the Federal Reserve meeting was "making an impact" on trading volumes.

Concerns about the state of the economy have resulted in consumers tightening their belts, which has put pressure on already struggling retailers. In fact, the Consumer Confidence Index dipped for the fourth month in a row, leaving April's reading of 62.3 the lowest mark in five years. However, the level was in line with market expectations.

A settlement for Univision?

Univision Communications' strip of institutional bank debt traded up after news surfaced that the trial regarding the Televisa litigation was postponed to July 1 from Tuesday, creating an assumption that there's some sort of settlement in the works, according to a trader.

The bank debt was quoted at 83½ bid, 84½ offered, up from 81 bid, 82 offered, the trader said.

Over in the corporate debt, a trader saw Univision's 9¾% notes due 2015 trading at 72.25 bid versus levels Monday around 64.5 bid, none offered.

"They opened at 69 [Tuesday] and traded up to 72.25 bid, so there's no question these things have popped by multiple points," he said.

He also saw the company's 7.85% notes due 2011 at 96.75 bid, 97 offered, well up from round-lot trades around 92 on Monday and from levels around 90 bid this past Thursday and Friday. Another trader called the bonds up 3.5 points at 95.5.

The legal battle between Univision and Televisa, which focuses on breach of contract issues and royalties, first began in June 2005.

Specifically, Televisa alleges that Univision failed to pay Televisa royalties attributable to revenues from certain programs and from use of unsold time to promote assets, Univision edited, without permission, certain Televisa programs and related copyright infringement claims, Univision breached a soccer agreement, Univision did not cooperate with various Televisa audit rights and efforts and Univision has not been properly carrying out a provision of the PLA that gives Televisa the secondary right to use Univision's unsold advertising inventory.

Under the lawsuit, Televisa is seeking a declaration that Univision is in material breach of the PLA and soccer agreement, that Televisa has the right to suspend or terminate its performance under the PLA and that Televisa may, without liability to Univision, transmit or permit others to transmit any television programming into the United States from Mexico over or by means of the internet.

Univision is a Los Angeles-based Spanish-language media company.

Firmness still felt in broad market

A trader said stubs of Calpine Corp.'s old debt were "inching up," closing around 20.

The trader also said that there has been a slight increase in activity in Tousa Inc.'s bonds. He said the subordinated issues - including the 10 3/8% notes due 2012 and the 7½% notes due 2011 and 2015, respectively - were "up a little" at around 9.5.

At another desk, a trader said JB Poindexter Co. Inc.'s 8¾% notes due 2014 jumped "out of nowhere" to 72 bid, 74 offered from around 70 previously. The company held its quarterly conference call Tuesday morning.

Phonebook publishers took a hit Tuesday, with Idearc Inc.'s 8% notes due 2016 falling nearly 3 points to 65.5 and sector peer Dex Media's 8% notes due 2013 slipping 2 points to 77. Idearc will hold its annual stockholders meeting on Thursday and will release its earnings on Tuesday.

Sara Rosenberg and Paul Deckelman contributed to this article.

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