Tyson numbers hurt Pilgrim's Pride; Claire's bonds weaker; Chrysler Finance loan better, Ford down

By Stephanie N. Rotondo

Portland, Ore., July 28 - Bad numbers at Tyson Foods Inc. put pressure on Pilgrim's Pride Corp.'s bonds Monday.

Pilgrim's Pride is scheduled to release its earnings Tuesday, and investors - anticipating the figures would mirror those of rival Tyson - pushed the food processor's bonds down 2 to 3 points on the day. Both companies have suffered from higher feed costs, as well as an oversupply in the poultry market.

Meanwhile, Claire's Stores Inc.'s bonds headed lower during the session. Moody's Investors Service cut the specialty retailer's rating, but markets sources said the debt had started to fall even before that news came out. The rest of the retail sector closed generally weaker, as well.

Chrysler Financial's bank debt turned upward, reversing the direction it started to take on Friday. However, Chrysler Corp. LLC, also known as Chrysler Auto, saw its term loan unchanged on the day. Traders were uncertain what had boosted the finance company, but not the automaker. In the rest of the autosphere, Ford Motor Co.'s loan traded lower.

Pilgrim's Pride weaker

Tyson Foods reported disappointing second-quarter results Monday. Investors, anticipating that rival Pilgrim's Pride's earnings would be equally dismal, pushed the latter's bonds down.

One trader said he saw an 83 bid in Pilgrim's 7 5/8% notes due 2015. He saw the 8 3/8% notes due 2017 trade at 77 before coming in to close closer to 74.

Another trader quoted the 7 5/8% notes at 83 bid, 85 offered and the 8 3/8% notes at 74.5 bid, 76.5 offered, down 2 to 3 points on the day. Another source pegged the 8 3/8% notes at 74 bid, 75 offered and the 7 5/8% notes at 83 bid, 84 offered.

Due to higher feed costs, Tyson's net profit shrunk to $9 million, versus $111 million the year before. Tyson management said a glut of chicken in the marketplace has made it difficult to pass on higher costs to consumers.

Pittsburg, Texas-based Pilgrim's is scheduled to release its earnings report Tuesday before the market opens. A conference call to discuss the results will be held at 10 a.m. ET.

Like Tyson, the market is not expecting stellar numbers from Pilgrim's. Furthermore, both companies have said it will be the end of 2008, or possibly into 2009, until the figures will recover.

Claire's bonds fall

Specialty retailer Claire's Stores had its rating cut by Moody's, and its bonds reacted in kind.

A trader called the debt "a little lower," noting the downgrade. However, he said that the bonds had begun to fall even before the news came out.

The trader placed the 10½% notes due 2017 around 35 and the 9¼% notes due 2015 at 48.5 bid, 49 offered.

But another trader called the paper "kind of sideways," with the 10½% notes at 35 bid, 36 offered and the 9¼% notes at 49 bid, 50 offered.

At another desk, a trader quoted the 9¼% notes at 48.75 bid, 49.75 offered, also seeing the 10½% notes at 35 bid, 36 offered.

Moody's slashed its rating on the Pembroke Pines, Fla.-based company, citing weak operating numbers that have resulted in a decine in the company's debt protection. The probability of default grade fell to Caa1 from B3.

Still, the downgrade came as little surprise to market players.

"They have been on watch for some time," said one source.

Said another, "Nobody cares about Claire's."

In the rest of the retail sector, retailers were seen generally weaker. Bon-Ton Stores Inc.'s 10¼% notes due 2014 slipped to 55, while Yankee Candle Co. Inc.'s 9¾% notes due 2017 traded as low as 60 during the session.

Chrysler loan up, Ford debt down

Chrysler Financial's first- and second-lien term loans were better in light activity, according to traders.

The first-lien term loan was quoted at 82¾ bid, 83¾ offered, up from 82 bid, 83 offered, and the second-lien term loan was quoted at 61¾ bid, 63¾ offered, up from 61 bid, 63 offered, traders said.

Meanwhile, Chrysler Auto, which saw its term loan plunge on Friday after news surfaced that the company would stop leasing vehicles, was basically unchanged and not really quoted as no trading activity was seen in the name.

On Friday, the Chrysler Auto term loan was quoted at 37 bid, 47 offered, down from Thursday's levels of 47 bid, 49 offered. With no real levels on Monday, one trader guessed that the paper was probably somewhere in the low-40 context.

"Not really sure why Chrysler Financial is up. [Leasing is a] relatively small portion of their business so news on Friday didn't really affect it," one trader added.

Meanwhile, Ford Motor's term loan traded down on Monday, although there was no particular news seen sparking the movement, according to a trader.

The term loan was quoted at 80 3/8 bid, 80 7/8 offered, down from Friday's levels of 80¼ bid, 81¼ offered, the trader said.

On Monday morning, the paper did open higher with levels of 81 bid, 81½ offered but then came in for no specific reason, the trader added.

Chrysler Financial is a provider of financial services for vehicles. Chrysler Auto is a producer and seller of Chrysler, Dodge and Jeep vehicles. Ford is a Dearborn, Mich.-based automotive company.

Softness in the marketplace

Casinos were by and large weaker on Monday. A trader said Harrah's Entertainment LLC's 10¾% notes due 2016 hit a high of 77 before coming back to close at 76 bid, 76.25 offered.

Isle of Capri Casinos' 7% notes due 2014 fell a point to 69, while Station Casinos' 6½% notes due 2014 dropped as much as 2 points to 48. Station will report its quarterly results on Thursday.

Elsewhere, Swift Transportation Co. Inc.'s floating-rate notes due 2015 inched upward to 39 bid, 40 offered, a trader said, on a debt amendment proposal. The trader was unsure if the amendment dealt with the bank or corporate debt.

Idearc Inc.'s 8% notes due 2016 slipped a point to 58.75 bid. The phonebook publisher will release earnings on Tuesday.

Sara Rosenberg contributed to this article.

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