CIT Group bonds, loan bounce on bondholder bailout buzz; Sinclair stronger, but on no news

By Paul Deckelman and Paul A. Harris

New York, July 20 - CIT Group Inc.'s bonds shot up on Monday, once again in very heavy trading, on news reports - later confirmed by the company - that the troubled New York-based commercial lender had reached an agreement with its bondholders, who will front the company some $3 billion to allow it to continue its lending operations. It also began a recapitalization effort by announcing a tender offer for one of its most actively traded bond issues.

CIT's revolving credit loan was meanwhile also seen higher, and its New York Stock Exchange-traded shares absolutely zoomed on the news, which appears to keep the company from falling into a feared bankruptcy situation.

Elsewhere, Sinclair Broadcast Group Inc.'s bonds were seen to have moved up by as much as 8 points above recent levels, although there was no fresh news out on the TV station owner that might explain the move.

Smurfit-Stone Container Corp.'s bonds firmed to around the 40 level, again with no fresh news out on the bankrupt packaging company

CIT soars on bondholder deal

A trader said that, "like a broken record," the big story of the day was once again CIT Group, its eighth consecutive session as the dominant trading name. He quipped "you know the drill - just pick out the numbers from last week. The bonds have been everywhere."

Another trader said that he imagines that "for a few days [more] probably, it's going to be the big story."

The bonds jumped in busy dealings on the news that the troubled company's bondholders had agreed to proved the company with $3 billion of new financing to stave off the liquidity crunch which the company had been facing (see related story elsewhere in this issue), although the $99 million volume on its busiest issue, the floating-rate notes slated to come due on Aug. 17, was only about two-thirds of the turnover in that issue seen on Friday. Volume was also down on other CIT issues, although they still mostly dominated the various Most Actives lists. The company also announced a tender offer for its $1 billion of the August floaters.

The first trader saw the 6 7/8% notes slated to come due on Nov. 1 as having opened at "70 and change," then pushing up to the 80s, and finally going out around the mid-70s, "so they're still up 10 or 13 points from Friday.

There was, he said, "a lot of volume trading in the name."

There was also "pretty active trading" in some of the company's floating-rate notes, particularly the August floaters. He saw the bonds at 86-88, after starting the day at 83-95, and at one point pushing as high as 90 before coming off that peak level. "There was just a lot of activity," he said.

The second trader saw the August floaters as the most active, "for obvious reasons - they're going to be impacted the most by any sort of major decision" about the company's finances.

He saw the bonds around 871/2-88½ at the end of the day, which he said was up from the lower 70s on Friday.

"Obviously, they were all over the place on Friday," he said, "anywhere between 60 and 72, and then today, obviously, on the news that they are going to get the funding from the creditors, they were in the high 80s - 87-88. So they're up about 16 points."

Another active issue, he said, was the 6.10% bonds due 2067. Those bonds, he said, were trading around "141/2, 15, 16" - versus 7-8 on Friday. He estimated that they had closed around a 14-15 context on Monday, up around 6 points.

The third most active issue, he said, was CIT's 4¼% notes due 2010, which had moved up to around a 721/2-74½ context on Monday, up from the high 50s on Friday, "up around 17 points it looks like."

He also saw "a few trades" in the 5.20% notes due 2010. He saw those bonds go from a range between the high 50s and the low 60s at the close on Friday to around 65-66 on Monday.

CIT's 8.75% perpetual convertible preferred shares, or the C shares, were up substantially to 6.38 on Monday, which was improved from 2.98 on Friday.

The CIT 7.75% mandatory convertibles due 2015 moved down 1.4 point to 7.35, from 9.20 on Friday.

CIT revolver marches higher

In the bank-debt market, CIT's unsecured revolver due 2010 finished the day wrapped around 70, according to a trader who reported it at 69 bid, 72 offered.

Not long before, another trader said that the CIT revolver was at 65 bid, 68 offered, up from 61 bid, 63 offered on Friday, on news that private lenders might be willing to loan money to the ailing commercial lender.

Noting that secondary market volume, in general, was light on Monday, a trader said that there have been marks put out there on CIT loan paper, but actual trading activity was pretty light.

CIT's NYSE-traded shares meantime soared by 78.57%, or 55 cents, in Monday's dealings, closing at $1.25. At one point, the shares had advanced as far as $1.44, or more than double Friday's close of 70, before coming off that peak to close where they did. Volume of 351 million shares was more than eight times the usual turnover.

A junk trader said that at his shop, "I don't think we were even doing much other than just watching CIT. Everybody was waiting to see what was going to come out."

"I think the combination of it being the summer, and a Monday and the fact that CITs were pretty active, it was definitely the biggest name around today."

Lehman a little better

Apart from CIT Group but still among the financials, a trader said Lehman Brothers Holdings Inc.'s various issues of bonds, like its 5 5/8% notes due 2013, "have been drifting up," although he characterized this movement as "slightly, not a lot," quoting the bonds at 17 bid,17½ offered.

Sinclair Broadcast bounces on no news

A trader said that Sinclair Broadcast Group's 8% notes due 2012 had pushed up to 68 bid.

"It doesn't look like the bonds were too active," he opined, noting just one trade. He said the bonds were up "about 4 points from Thursday of last week," adding that "there was no activity in the converts, but I would imagine that they were obviously up with the equity move." Sinclair's NYSE-traded shares jumped 28 cents, or 20.90%, to end at $1.62. Volume of 645,000 shares was about 15% above the norm.

Another trader saw the Sinclair bonds at 68, calling that level "a lot higher than where they were -- but I did not see much activity at all in that issue."

A market source, pegging the bonds at a going-home price of 68 bid, called that an 8 point improvement over recent trading levels, including last week's price around 60, but said that there had only been a few relatively small odd-lot dealings.

There was no fresh news out on the Hunt Valley, Md.-based television station group owner, which has been struggling lately to find a solution to its dilemma caused by two issues of convertible notes, which the holders will soon be able to put back to the company if they choose. The company has already said that it does not have enough cash to repurchase all $437.8 million of those notes if the holders exercise their option, and said in a recent regulatory filing that it has begun planning for a potential restructuring, including a possible bankruptcy filing.

Smurfit-Stone sidles upward

A trader said that Smurfit- Stone Container's 8¼% notes due 2012 "were better again. They had gotten down to the mid-30s last week, and now, they're up trading in a 391/2-40½ context. That's the high[est that it's been] for a while."

He said that he had "not heard anything specifically" to explain recent activity in the Chicago-based packaging company's bonds. "It felt like there might be something coming up late last week, because they rallied from 35 to 39 pretty quickly. But we haven't heard anything - we've been asking around [in the market] for some color, but nobody claims that they know anything."

Another trader quoted the 81/4s at 40 bid, 42 offered, up 1½ points, on "not a lot of trades, but a couple."

Ford feels firmer

Among the automotive names, a trader saw Ford Motor Co.'s 7.45% bonds due 2031 up 2 points on the session at 63 bid, 65 offered. He also saw rival General Motors Corp.'s benchmark 8 3/8% bonds due 2033 down a point at 10¾ bid, 11¾ offered.

Rite Aid rallies

A trader saw Rite Aid Corp.'s bonds "a little active" on the day, quoting the Camp Hill, Pa.-based drugstore chain operator's 9 3/8% notes due 2015 at 65 bid, 66 offered, up from 64 bid, 65 offered, calling the gain "only a point, but on a decent amount of trading."

He also saw Rite Aid's 9½% notes due 2017 "kind of busy, too" in rising to 66 bid, "up only a point, but active,"

He said that he had seen no fresh news out that might explain the rise.

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