Charter boosted by narrower loss; Delphi steady despite 10-Q; Trump quiets down; Retail weaker

By Stephanie N. Rotondo

Portland, Ore., May 12 - In what was categorized as a "subdued" day in the distressed bond market, Charter Communications Inc.'s debt was among the few relatively active names Monday.

Charter released its first-quarter numbers Monday, which showed a narrower loss for the first three months of the year. While the company's bonds were a good point better on the day, traders were surprised the name did not get more play.

Delphi Corp. reported its financials late Friday. As the company continues it struggle to exit Chapter 11 protections, it reported a wider loss for the first quarter. But the company's bonds managed to hold steady, though the term loan lost some ground.

In the gaming arena, Trump Entertainment Resorts Inc. saw trading action in its bonds die down after being one of the more active names last week. Traders called the debt unchanged to weaker, while the rest of the sector held steady.

Distressed retailers were mostly weaker during trading, traders reported. Burlington Coat Factory Warehouse Corp.'s notes lost about a point, while Michael's Stores Inc. declined just under a point.

Overall, traders said it was a "typical Monday," but some were surprised that there was not more going on.

"It was strange," one trader said. "It felt like it might get started and it just never did."

Another trader said it was "like pulling teeth" to get anything done.

"It was kind of a dull day," another source said. "Nothing really exciting. There was a little trading in some names, but not a whole lot unless there was news out."

Charter paper firms on narrower loss

Trading in Charter Communications' paper was slightly more active than most during Monday's session after the company reported a narrower loss for the first quarter.

One trader called the company's debt "a little better post numbers," quoting the 11% notes due 2015 up 1 point at 84 bid, 84.5 offered.

Another trader echoed that market for the 11% notes and pegged the 8¾% notes due 2013 at 95 bid, 95.5 offered and the 10 7/8% notes due 2014 at 107.5 bid, 108 offered.

At another desk, a trader said Charter's debt was "trading up a good point," its "old" 11% notes at 84 bid, 85 offered, compared to levels around 83 on Friday.

Still, traders were surprised that there was not more volume in the name.

"That should have been the big mover," one trader said.

Meanwhile, Charter's "new" term loan was stronger during the trading session, quoted at 99¼ bid, par offered, up from 98¾ bid, 99¾ offered on Friday, a trader said.

The company's "old" term loan was unchanged at 88½ bid, 89½ offered, the trader continued, adding that the "new" is more liquid and trades more; therefore, it was more affected by the earnings news.

For the first quarter, Charter posted a loss of $358 million, versus a loss of $381 million in 2007. The better figures came as a result of a 10% increase in revenue, attributed to more internet phone subscribers.

Charter Communications is a St. Louis-based cable and internet services provider.

Elsewhere in the sector, Level 3 Communications Inc. also reported a narrower quarterly loss. However, market sources deemed the Broomfield, Colo.-based company's bonds unchanged to weaker on the day.

One trader said there was "nothing notable" in the name, calling the debt unchanged. Another source saw the 9¼% notes due 2014 half a point softer at around 93.

Level 3 incurred a $181 million loss for the first quarter of 2008, compared to a loss of $647 million the previous year. Revenue remained stagnant at $1.1 billion.

Delphi notes quiet after 10-Q

Among other quarterly filers, Delphi reported its financials late Friday, which showed a wider loss for the first quarter.

But a trader said there was little trading in the name, placing the company's debt generically in the high-30s. Another source pegged the bonds at 39 bid across the board.

Also, the second-lien debtor-in-possession loan ended the day at 98 bid, 98¾ offered, down from 98¼ bid, 99¼ offered.

For the first three months of 2008, Delphi showed a loss of $589 million. That compared to a loss of $533 million for the same time period in 2007. Delphi attributed the weaker numbers to a decline in revenues due to a slowdown in production at General Motors Corp. Revenue fell to $5.3 billion from $5.7 billion.

Delphi is a Troy, Mich.-based automotive parts supplier.

Action in Trump bonds dies down

After trading quite actively last week, Trump Entertainment's debt took a breather, traders reported.

A trader deemed the 8½% notes due 2015 "for the most part unchanged" at 61.25. Another trader said he saw "little bits" trading at 60.75 bid, 61.25 offered, "kind of right where they have been."

But another trader called the bonds lower at 60.75 bid, 61.25 offered, compared to 61 bid, 62 offered on Friday.

"With the exception of Trump, I think gaming was unchanged to a little firmer," he said.

On Thursday, the casino operator posted a wider net loss at $18.6 million, versus a net loss of just over $8 million for the same period the previous year. The company pointed to increased competition from new gaming centers in New York and Pennsylvania, a partial smoking ban and a general weakening of the economy for its lower numbers.

As a result of the quarterly report, Standard & Poor's cut its rating on the company to B- on Friday.

Trump Entertainment is an Atlantic City, N.J.-based hotel and casino operator.

Among other gaming names, Harrah's Operating's 10¾% notes due 2016 closed at 86 bid, 86.25 offered, a trader said. The trader said trades in the name stayed in a tight one-eighth of a point spread.

Another trader agreed, pegging the issue at "86 up and down."

Retailers mostly weaker

A trader said there was "some trading in retailers," calling price action "mixed to weaker."

The trader said Burlington Coat Factory's 11 1/8% notes due 2015 slipped a point from Friday, closing at 84.75 bid, 85 offered. Michael's Stores' notes were also softer by a half point to three-quarters of a point, he said. He quoted the 10% notes due 2014 around 91.5, down from Friday's closing levels of 93 bid, 93.5 offered and Monday's opening market of 92 bid, 92.5 offered.

The trader also saw Michael's 11 3/8% notes due 2016 down at 83.5 bid, 84 offered.

Another trader also called Michael's debt weaker, its 11 3/8% notes ending around 84.

That trader also deemed Linens n'Things Inc. floating-rate notes due 2014 lower at 32, as well as Bon-Ton Stores Inc.'s 10¼% notes due 2014, which closed at 75 bid.

Sally Beauty's bonds "wanted to trade down at the start," a trader said. However, "the seniors recovered a little bit though."

The trader said the 9¼% notes due 2014 opened the day at par, then ticked up to 100.25 by the end of the day.

Broad market mixed

Residential Capital LLC's longer-dated issues, such as the 6½% notes due 2012, were seen in the high-40s - "that's where it has been," a trader said.

The trader also said that Countrywide Financial Corp.'s debt "still seems like it's on the weaker side," its 4% notes due 2011 at around 84.5 compared to around 86 last week.

At another desk, a trader said the tech sector "recovered a little bit." He said that Freescale Semiconductors' bonds "came up off the bottom," its 8 7/8% notes due 2014 at around 88, up half a point, and its 10 1/8% notes due 2016 at 80 bid, 80.25 offered versus levels around 79 on Friday.

The trader did note that there were "only a few trades" in the name.

"There was not a lot of volume," he said.

Calpine term loan lower

Calpine Corp.'s term loan fell off a little in trading after the company announced first-quarter results, according to a trader.

The term loan was quoted at 92¾ bid, 93¼ offered, down from Friday's levels of 93¼ bid, 93¾ offered, the trader said.

For the quarter, the company reported operating revenues of $1.95 billion, up 17% from 1.66 billion last year, net loss of $214 million, compared to a net loss of $459 million last year, and adjusted EBITDA of $294 million, up 18% from $250 million last year.

Gross profit for the quarter decreased by $97 million to a loss of $29 million, compared to the same period in 2007. The change in gross profit is due primarily to a $92 million unfavorable period-to-period movement in mark-to-market activity recorded in both operating revenues and in fuel and purchased energy expense.

"I am very pleased to announce our first-quarter results showing solid performance in our core operations. In this transition quarter, during which we emerged from bankruptcy, we showed substantial improvement in consolidated commodity margin and adjusted EBITDA, as compared to the same period during 2007," said Robert P. May, chief executive officer, in a news release.

Calpine is a San Jose, Calif.-based power company.

Sara Rosenberg contributed to this article.

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