Amkor jumps on converts sale, guidance news; Freescale gains; Visteon loan unfazed by downgrade

By Stephanie N. Rotondo and Sara Rosenberg

Portland, Ore., March 26 - As the equity markets extended its gains Thursday, so did the distressed bond market, traders reported.

"There was a fair amount of trading," one trader said, calling the overall market about a point better.

"The market in general had a pretty good tone to it," said another trader. "In general a lot of things were drifting higher given the stronger equity market."

Still, the better tone did not mean market players had an easy day.

"There seemed to be a sellers' strike today," the first trader stated. "It was harder to find offerings."

What made it all the more difficult, he said, was the lack of calendar and the "offering wanted" lists that were circulating, as opposed to the "bid wanted" lists of yore.

"There were definitely more buyers than sellers," he said.

And buyers were taking advantage of good news out of Amkor Technology Inc. The company's bonds jumped up as much as 13 points on the day after word of a convertibles sale came out, along with news that first-quarter sales were on track to hit the more favorable end of the company's guidance.

Also in the technology sector, Freescale Semiconductor Inc.'s paper edged higher, despite its senior lenders filing a lawsuit against the company over its recent distressed tender offer.

A rating downgrade did little to hurt Visteon Corp.'s bank debt. In fact, traders saw the issue moving upward during the session.

Amkor, Freescale gain

The technology sector as a whole was seen firming during Thursday's session, traders reported, but it was Amkor Technology that led the way.

Amkor's debt got as good as 13 points better on the day following news of a convertibles sale, as well as a positive first-quarter forecast.

A trader called the 9¼% notes due 2016 the most active of the company's issues, gaining about 6 points to close at 73 bid, 74 offered. That compared with levels around 67 on Wednesday, he said.

Another trader also said the issue was "on the active side," but called the debt "close to 10" points firmer at 72 bid, 73 offered.

At another desk, a market source saw the 7¾% notes due 2013 gain 13 points to finish at 77 bid.

Amkor announced a $240 million convertible senior subordinated debt sale late Wednesday. Proceeds from the sale will be used to retire existing debt and for general corporate purposes. The company said that James J. Kim, its chairman and chief executive, would purchase a bulk of the notes, at least $150 million to $200 million.

Furthermore, Amkor said its first-quarter sales were on track to hit a 30% to 34% decline, which was at the more positive side of the company's guidance. Gross margins were seen growing stronger at 8% to 12%. Still, the company declined to update its expected loss per share price.

"It is too early for the company to provide other 2009 first-quarter financial information and therefore, it is neither updating nor reaffirming its prior guidance regarding net income," the Chandler, Ariz.-based company said in a press release.

Elsewhere in the sector, Freescale Semiconductor's bonds moved higher despite news that the company was facing a lender lawsuit regarding its recent tender offer.

At one desk, Freecale's 8 7/8% notes due 2014 were seen gaining a point to 20.5 bid, while at another, the 10 1/8% notes due 2016 were quoted at 19 bid, 20 offered, nearly 3.5 points firmer day-over-day.

Freescale's senior lenders filed a lawsuit against the chipmaker, alleging that its recent $4 billion bonds-for-loan exchange "unjustly enriched" bondholders. The suit claims that holders who tendered their debt received a portion of a new $1 billion term loan backed by collateral, which in turn could reduce the amount said lenders might recover in the event of a bankruptcy.

Also, under the terms of Freescale's original loan, the company was prohibited from issuing new loans if it causes "a material adverse effect."

Freescale is based in Austin, Texas.

Visteon unharmed by rating drop

Visteon's term loan was actually seen as being a little better on Thursday even though the company experienced a ratings downgrade during the session, according to a trader.

The term loan was quoted at 15 bid, 17 offered, compared with 14 bid, 15 offered on Wednesday, the trader said.

"Don't think downgrade is really going to affect this. They have much bigger problems," the trader remarked.

On Thursday, Moody's Investors Service lowered Visteon's corporate family rating to Ca from Caa2 and secured term loan to Caa2 from B3, and the outlook remains negative.

According to Moody's, the downgrades reflect the company's eroding credit profile and the limited prospects for near-term developments that would strengthen credit metrics sufficiently to support a higher rating.

Moody's continued to say that the rating cuts also consider Visteon's recent announcement that it anticipates that its 2008 audit report will likely contain an explanatory paragraph indicating substantial doubt about its ability to continue as a going concern.

A going concern opinion could lead to the acceleration of the company's bank debt and cross defaults to other debt, if a waiver and/or amendment - which the company is currently working on - is not obtained.

Visteon is a Van Buren Township, Mich.-based automotive supplier focused on climate control systems, electronic/lighting products and interiors.

Broad market firmer

Aramark Corp.'s 8½% notes due 2015 closed at 93.25 bid, 94.25 offered, which a trader called slightly firmer.

Sprint Nextel Corp.'s 8 3/8% notes due 2012 inched up a point to 88 versus 86 bid, 87 offered previously.

"It seems to go up a point everyday," a trader said of the name, adding that it has gained about 10 points in the last month.

Among financials, Washington Mutual Inc.'s senior holding company paper, like the 4% notes due 2009, were "quiet" after the volatile session on Wednesday. A trader deemed the bonds unchanged at 82 bid, 83 offered, while the subordinated issues, such as the 4 5/8% notes due 2014, were likewise steady around 60.

Capmark Financial Group Inc.'s paper was "more active, but the prices were around the same zip code," a trader said, placing the 5 7/8% notes due 2012 around 20.

Opti Canada Inc.'s 8¼% notes due 2014 "continue to get better," following word of a Petro-Canada-Suncor merger earlier in the week. A trader pegged the issue around 44.

Blockbuster Inc.'s 9% notes due 2012 were "a little better" at 47.

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